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Apple Shareholder Meeting: Board of Directors & Auditors, In; Exec Salary Cap, Out [Updated]

TMO Reports - Apple Shareholder Meeting: Board of Directors & Auditors, In; Exec Salary Cap, Out [Updated]

by , 4:15 PM EDT, April 22nd, 2004

[Update: We have added additional information about Steve Jobs' compensation, as requested in the comments. - Editor]

At Apple's annual shareholder meeting, held today at Apple's corporate headquarters, shareholders were asked to vote on three shareholder proposals: reelecting the board of directors, retaining KPMG as the company's auditor, and a shareholder proposal from the United Brotherhood of Carpenters and Jointers to limit executive compensation.

Final results of the shareholder vote will not be available until all votes actually cast at the shareholder meeting can be tabulated, a standard practice. Apple has preliminary votes, however, from the proxy votes cast ahead of time. Those results are not likely to be changed by votes from the meeting, however, as major stock holders tend to vote ahead of time by proxy.

The board

Apple's board of directors was reelected with a vote of some 82% of shareholders. This vote covered all six board members, including Bill Campbell, Millard Drexler, Steve Jobs, Arthur Levinson, Jerome York, and Al Gore. Votes were cast for individual board members, but Apple did not break out numbers for member, offering only the 82% figure that reflected the entire board.

The 18% who did not vote for Apple's board includes votes from the California Public Employees' Retirement System (Calpers). In addition to being one of Apple's biggest shareholders (1.48 million shares), Calpers is known as an activist investment fund that seeks changes in corporate governance. The fund announced before the meeting that it would be withholding its votes for the board because of the board's failure to implement a shareholder-approved plan to expense stock options (see TMO's full coverage for more information).

There were no shareholder questions asked about Apple's board of directors.

Apple's auditors

Apple wanted to retain the services of KPMG LLP as the company's auditor. This move had been opposed by Calpers as KPMG also perform non-auditing and consulting services for Apple, presenting a possible conflict-of-interest. Shareholders approved retaining KPMG as auditor, and there were no shareholder questions asked about the issue.


Another shareholder group pushing an activist agenda is the United Brotherhood of Carpenters and Jointers, a union whose investments include some 6,200 shares of AAPL. The Brotherhood backed a proposal to limit executive compensation, citing specifically a widening gap between what ordinary workers earn, and the compensation granted to executives.

"We believe that compensation paid to senior executives at most companies, including ours, is excessive, unjustified, and contrary to the interests of the Company, its shareholders, and other important corporate constituents," a Brotherhood member said at the time the proposal was first made public. "We believe that it is long past time for shareholders to be proactive and provide companies clear input on the parameters of what they consider to be reasonable and fair executive compensation. We believe that executive compensation should be designed to promote the creation of long-term corporate value."

A that time, Apple's board of directors' dismissed the proposal saying it was "unnecessary" and could stifle any future hiring of qualified business executives. Calpers, the retirement fund that wants Apple to expense its options, also opposed the measure.

The company board also recommended a rejection of the cap on salaries of directors saying, "limiting executive pay to no more than US$1 per year makes no sense. The base salaries of our executive officers, while greater than $1 annually, are generally consistent with the salaries paid by comparable technology companies."

The $1 figure referenced in the statement refers to CEO Steve Jobs' annual salary, which is $1, a figure paid to make Mr. Jobs eligible for health insurance for his family. In reality, the Brotherhood was pushing for a specific cap of US$1 million annually, and a cap on stock options that would not exceed the annual salary.

According to preliminary results, this proposal was voted down, and there were no shareholder questions asked about the issue.

Mr. Jobs principal compensation has come in the form of a US$90 million jet, as well as 5 million restricted shares, the end result of trading in many millions of stock options that were under water. Restricted shares are counted as an expense, as opposed to stock options, which are not listed as an expense. At the time they were granted, the restricted stocks had a value of US$74,550,000, but they don't vest until March of 2006.

The stock grant and the jet have a combined value of approximately US$164 million, Mr. Jobs' total compensation since he returned to Apple in 1997, seven years ago, with some of that value not vesting for another two years. When covering these grants and Mr. Jobs jet, many news organizations have chosen to look at them as being compensation for one year of service, instead of nine years.

Brad Gibson assisted with this article.

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