Apple: The Case for Proxy Access


Update: Preliminary voting results indicate that our proxy access proposal got 39% of the vote. Yes, the proposal could have been worded to more closely conform to the Rule 14a-11 standards. Hopefully, Apple got the message and will propose a “best practices” revision of their articles and bylaws as needed for the 2016 annual meeting. If not, we’ll be back at that meeting with our own proxy access proposal.

ISS recommends its clients vote in support of proxy access, calling the proposed eligibility requirements of my proposal at Apple robust, while safeguarding against abuses in the nominating process. Glass Lewis opposes the proposal because “given the company’s… positive financial performance, we do not believe that adoption of this proposal is necessary at this time.”

So, the tool you’ll need when the company is in trouble, you’re supposed to wait until the company is already in trouble to put that in place, according to Glass Lewis… then you wait again until you can make nominations? That’s like waiting until a building is on fire to install a sprinkling system.

Citigroup endorsed my proxy access proposal. Apache is the latest company to support proxy access. That company, which sued retail shareowner John Chevedden rather than allow shareholders to vote to eliminate supermajority requirements, seems to have a better grasp of when proxy access is needed than proxy advisor Glass Lewis.

The C$238.8 billion ($189.4 billion) Toronto-based CPPIB and the $182.2 billion FSBA both plan to vote in support of a shareholder proposal calling for proxy access, enabling shareholders to use corporate proxy materials to nominate up to 25% of the board. CalSTRS ($186 billion) voted for proxy access, using the Glass Lewis voting platform.

Here’s my planned presentation at Apple:

Speaking in support of Proposal #6: Proxy Access at Apple

I’m delighted to see huge progress, not only on Apple’s products but also its corporate governance. Declassifying the board, requiring a majority vote for directors – These are positive steps but I’m not sure they entitle Apple to claim leadership.

100 companies will face proxy access proposals this year. Several have already indicated their support. So far our Board has only committed to discussing the desirability of proxy access with shareholders.

Of course, we welcome any opportunity for dialogue. But the desirability of proxy access is already clear. CFA Institute recently issued a thorough report concluding that proxy access has the potential to enhance board performance and raise U.S. market capitalization by up to $140 billion with “little cost or disruption.”

By law, we have 500 words to make a proposal that simply offers advice. Apple used over 1200 to say how the proposal could be improved and to oppose it. While our proposal does specify language, we have no problem with the changes Apple suggests.

If you pass this proposal, the Board can come back with any necessary changes to its charter and bylaw provisions for another vote in next year’s proxy. And if proxy access then passes, keep in mind the thresholds for inclusion are high and being in the proxy isn’t the same as winning seats. Any future nominees will still need to get a majority of votes cast – your votes.

Let’s allow groups of shareholders owning 3% of our company (that’s $23B worth of stock) – let them – if they have also held that stock for 3 years – place as many as 2 nominees on the proxy – that’s 25% of the Board.

Proxy access will drive a competition for ideas and talent among board candidates and create direct accountability to you, the shareholders.

Apple can lead the way in creating momentum for the entire market. Please vote in favor of proposal #6, proxy access.

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