Apple Board’s ‘Steve Jobs Dilemma’




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Introduction

In early 2011, the Board of Directors at the world’s leading technology company, Apple, Inc. (Apple), found itself once again at the center of a corporate governance debate. With the company’s CEO Steven Paul Jobs (Jobs) opting for an indefinite sick leave in January 2011 -- for the third time since 2003 -- a section of the shareholders demanded that the board adopt and disclose a CEO succession planning policy.

With the perception that Apple and its future success were strongly associated with its charismatic leader Jobs, any adverse news on Jobs’s health had become a subject of concern for the shareholders. While some shareholders contended that the board should be more forthcoming with information related to Jobs and his successor, Apple maintained that the board did have a plan but that disclosing such vital information would diminish the company’s competitive advantage.

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Apple, which had impressed analysts and shareholders with its strong business performance and its ability to come out with innovative products, had been criticized for a long time as being an under-governed and poorly directed company. Corporate governance advocates were of the opinion that the size of its board was too small and that the board remained in Jobs’s shadow. In 2011, a notable section of the shareholders indicated that they wanted the board to be more transparent and that they would now step up pressure to hold the directors accountable.

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