Ralph Nader Uses Apple’s Success as Focal Point for His Causes in Open Letter

Ralph Nader (Credit: Wikimedia Commons}

Ralph Nader has penned an open letter to Apple CEO Tim Cook urging him to suspend his company’s plan to to spend US$100 Billion on stock buybacks. Mr. Nader wants Apple to spend that money on other, progressive causes, or at the least put it to a shareholder vote.

In a mixed-message argument, he also said Apple should use the money for dividends, as they  benefit shareholders more than buybacks. Buybacks, he said, instead benefit “executive compensation metrics.” The last point relates to any bonuses predicated on rising share prices.

Mr. Nader’s open letter is printed in full on page 2 of this article. It’s also available on his website.

Ralph Nader (Credit: Wikimedia Commons}
Ralph Nader (Credit: Wikimedia Commons)

Apple Is a Target

Apple is often the target of both left and right wing activists looking to use Apple’s success and wealth to advance their causes. Right-wingers have frequently targeted Apple board member and former U.S. Vice President Al Gore for vague and sundry environmental issues relating to Apple. The National Center for Public Policy Research (NCPPR) led a brief campaign to force Apple to disclose the costs of being more sustainable, a practice that group deems a mortal sin.

Left-wing groups have targeted Apple for environmental and labor issues, often holding Apple to a standard no other company comes close to meeting, and one where Apple often takes the lead. Green Peace has frequently criticized Apple (and praised Apple, too), and monologuist Mike Daisy led a one-man campaign against Apple for labor issues that was eventually derailed by the fact that he wasn’t using facts. New York-based China Labor Watch has also targeted Apple’s supply chain for criticism.

Activist shareholders from across the spectrum have targeted these and other issues in shareholder resolutions, but those shareholders have by and large backed Apple, with few exceptions.

Ralph Nader, AAPL Shareholder

Enter Ralph Nader, an AAPL shareholder (like me, for full disclosure). Rather than buying back shares, Ralph Nader wants Apple to…really, it’s irrelevant. None of the scattered and mixed-message causes are the real point of his letter. What Mr. Nader really wants is to bring attention to his belief that the concentration of wealth into ever-fewer hands is bad and to protest tax cuts for the rich and insanely rich corporations like Apple.

While his open letter does play lip service to some progressive causes he believes in (worker pay, the environment, corporate contributions to local communities, and youth tech addiction), it’s real point is criticize the Trump tax cuts using Apple’s share buybacks as a focal point. It’s real point is to criticize the way those

If you agree with Mr. Nader, you’re likely to think this open letter is spot on. If you don’t, you’re likely to treat it with disdain. Either way, Apple’s shareholders are highly unlikely to disagree with Apple’s decision to buyback shares. I’d be shocked if even $100 billion going straight to a one-time dividend would get more than 20% of shareholder approval if Apple’s management opposed the measure.

And whatever the case, Tim Cook will not heed this letter, nor will he be asked to by shareholders or Apple’s board of directors.

Next: Ralph Nader Open Letter to Tim Cook – May 2018

6 thoughts on “Ralph Nader Uses Apple’s Success as Focal Point for His Causes in Open Letter

  • As a shareholder I like big dividends, but bought Apple years before it paid any dividend. It was a good growth stock. I had no idea just how good at the time or Id have bought twice as much! I am surprised we are not hearing the calls for Apple to make a little less money and bring more manufacturing to the US.

  • I am pretty sure stock buybacks give shareholders the same amount of equity regardless of how long they have held the stock, but I guess your point is that with an equity increase requires you to hold the stock slightly longer to benefit from it vs. a dividend which pays immediately. I’m not convinced it makes a huge difference, but I guess it will to people who hold the stock for less than a month or however long it takes for the priced to readjust after a buyback.

  • Ralph requested a thoughtful response – here’s mine, to this part of his argument:

    Studies have shown that stock buybacks are just one variable in a large matrix of variables – internal and external to the company – that shape stock price and they are a weak variable at that. (See attached list of studies). You can examine major company stock buybacks for yourself (e.g., Cisco and Walmart) and see the accuracy of that observation. Cisco, after huge buybacks and much greater profits and size, has its stock about one-half of its March 2000 value.

    You seem to infer with these sentences that “major company stock buybacks” are a losing strategy, as punctuated in the closing of this paragraph with your cherry-picked Cisco example. The problem with your analysis is that Apple is not only now considering stock buybacks – it has been buying back its stock for many years already, and this has been enormously profitable for Apple’s long-term shareholders.

    The other problem with your analysis is that Apple’s large cash hoard has been built up over many years, so why should it be shared all at once with the Johnny-come-latelys who only just recently jumped into the stock? I have little doubt many of them were probably hoping for a large one-time dividend, because that’s the way these clowns operate. Short term, short term, short term. Stock buybacks, carefully considered, are an effective means of rewarding patient long-term investors.

    Yes, I’m sure some CEOs have abused this practice…that’s not the point.

  • I understand his point. Although it’s basically a wash in terms of shareholder value (increased ownership and eventual share prices versus being paid out as a cash dividend) for me at least I would generally prefer to have the cash and be able to spend it as I choose – either buying more of AAPL or doing something else with the money.

    Here’s what the motley fool had to say:

    Regarding Nader’s idea of giving a year’s pay as a bonus to every Foxconn employee who builds iPhones – that’s a pretty cool idea, at least if you work at Foxconn! However I think that the many other Apple employees in Cupertino, R&D, retail, and all over the world would feel it was unfair given that they contribute to the company as well.

    Personally I wouldn’t mind if Apple decided to split it somehow as a shareholder dividend *and* a bonus to all Apple employees and contractors who have done a great job making excellent products.

  • As William F. Buckley Jr. said:
    Idealism is fine, but as it approaches reality, the costs become prohibitive.

    Mr. Nader is an idealist. He sees wonderful possibilities, options that would be great, except they won’t work.
    So Ralph Nader can go on tilting at windmills. The rest of us will get the job done.

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