Proxy Access at Apple

Proxy Access at Apple: Last Day to Vote

Proxy Access at AppleProxy Access at Apple (AAPL) will be one of the most important votes of the proxy season. Will shareholders settle for the board’s recently adopted “lite” version, akin to greenwashing, or will shareholders vote in favor of real proxy access? Boards, investors, and the corporate governance industrial complex are watching in anticipation.  Your opportunity to vote  on this important issue expires TODAY, February 25th at 8:59pm PST (11:59pm EST) if you are using ProxyVote.com.

80% of retail shares aren’t typically voted, so it is almost as if you’ll be voting for five. If you are like me, you may hold Apple ($AAPL) stock in more than one account. Be sure to vote them all. Do it today, unless you will attend the meeting tomorrow. Vote FOR #8, Adopt Proxy Access Right.

Proxy Access at Apple: Background

“Proxy access” refers to the right of a shareholder to include his or her own nominee(s) on the company’s proxy card and avoid the costs associated with conducting his or her own proxy solicitation, which can be significant.

Les Greenberg and I filed a petition to the SEC in 2002 aimed at allowing shareholders access to the corporate proxy for their director nominees. The Council of Institutional Investors (CII) said our petition “re-energized” the “debate over shareholder access.” After two failed attempts by the SEC to require all companies to offer limited access to shareholder nominees, the SEC finally enacted Rule 14a-11. Unfortunately, the SEC vacated the after the Business Roundtable (a union-like organization for CEOs) and the Business Roundtable convinced the court the SEC had underestimate the amount boards would be willing to spend to keep themselves entrenched. See Brown, J. Robert, Shareholder Access and Uneconomic Economic Analysis: Business Roundtable v. SEC (August 26, 2011). 

CII - Proxy Access: Best PracticesNow proxy access must be accomplished one company at a time, either by shareholder initiatives or through board action. Since Apple is the largest company, others are looking to it as an example of what they should do on this critical issue. As Apple points out in their opposition statement to the proposal that John Harrington and I filed to create real proxy access at Apple, the board recently adopted proxy access bylaws. However, just as BP used to tout its slogan “beyond petroleum,” proxy access at Apple is more white-wash than real. Our proposal is modeled after CII’s Best Practices.

Proxy Access at Apple: From Lite to Robust

#8 Proxy Access. Apple has adopted a ‘lite’ version of proxy access. Our proposal seeks a more robust version based on the SEC’s vacated Rule 14a-11 and CII’s Best PracticesThe vast majority of proxy access bylaws adopted by Fortune 500 companies allow shareholders to nominate at least two directors, whereas Apple’s bylaws allow for only one nominee. See my extensive critique at Apple’s Proxy Access Lite Needs Changing.

Proxy Access at Apple: Early Announced Votes

Apple’s opposition statement to our proposal for real proxy access cites a statement made by Patrick McGurn, special counsel at ISS, the shareholder advisory group, who responded to Apple’s adoption of proxy access by stating that “other boards are likely to look to such respected companies and are likely to examine this issue now.” Yes, Apple’s proxy access lite got the attention of other companies but although Mr. McGurn noted the importance of Apple giving the issue attention, that did not mean ISS thought proxy access at Apple, as adopted by the board, was adequate. 

In fact, ISS urges its subscribers to vote for our proposal to create real proxy access at Apple, as do early vote announcers such as the following:

  • Australia’s Local Government Super
  • California State Teachers’ Retirement System
  • Calvert
  • Canada Pension Plan Investment Board
  • Christian Brothers Investment Services
  • Domini
  • Florida SBA
  • Ontario Teachers’ Pension Plan
  • Texas Teacher Retirement System
  • Trillium
  • Unitarian Universalist Common Endowment.

You can find several of these votes at ProxyDemocracy.org, a free service, and others at ProxyInsight.com, a paid subscription service. For others, you may need to go directly to their announcement page. See my Shareowner Action Handbook for links.

Proxy Access Votes Upcoming: Mark Your Calendar

I created a small FocusList at ProxyDemocracy.org with some upcoming votes on proxy access. This database only tracks a few pre-disclosing funds. See how some funds are voting in upcoming proxies and how they voted in the past. I’ve pasted some of the upcoming votes below. 

There are 6 upcoming proposals in this FocusList. corpgov’s positions on these proposals are shown below, along with any advance votes we have collected.

Warning

Be sure to vote each item on the proxy. Any items left blank are voted in favor of management’s recommendations. (See Broken Windows & Proxy Vote Rigging – Both Invite More Serious Crime). I generally vote against pay packages where NEOs were paid above median in the previous year but make exceptions if warranted. According to Bebchuk, Lucian A. and Grinstein, Yaniv (The Growth of Executive Pay), aggregate compensation by public companies to NEOs increased from 5 percent of earnings in 1993-1995 to about 10 percent in 2001-2003.

Few firms admit to having average executives. They generally set compensation at above average for their “peer group,” which is often chosen aspirationally. While the “Lake Woebegone effect” may be nice in fictional towns, “where all the children are above average,” it doesn’t work well for society to have all CEOs considered above average, with their collective pay spiraling out of control. We need to slow the pace of money going to the 1% if our economy is not to become third world. The rationale for peer group benchmarking is a mythological market for CEOs.

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