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Who Will Eventually Take Over For Apple's Steve Jobs, And How Soon Should Shareholders Be Told?

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On January 17, Apple CEO Steve Jobs announced a leave of absence for health reasons. His temporary replacement as acting-CEO is Chief Operating Officer Tim Cook. But the question for shareholders remains: who will take Jobs' place when the CEO eventually, and inevitably, does choose to fully step down?

Apple shareholders are rightfully concerned about the company's plan to eventually replace Jobs. After all, many long-term shareholders have vivid memories of the company's woeful performance in the Jobs-less years between 1985 and 1997.

Meanwhile, the CEO succession plan, or absence thereof, is threatening to drive a wedge between management and shareholders. Today, Bloomberg reported that an Apple shareholder proposal requiring the company to disclose a succession plan for Jobs has gained the support of Institutional Shareholder Services, a proxy-advising service.

ISS helps institutional investors decide how to vote on shareholder propositions. ISS wants Apple’s board to disclose a CEO succession plan annually, according to a report released by the firm, Bloomberg reported. Additionally, the measure is backed by the Laborers’ International Union of North America.

"“A vote for the shareholder proposal to adopt a succession planning policy is warranted in light of the company’s limited disclosure regarding this issue and the market’s expression of concern over CEO succession at Apple,” ISS said in a report dated Jan. 28, according to Bloomberg. The laborers’ union announced the group’s support in a statement today.

Apple, however, has issues with the proposal and asked shareholder to vote against it in the proxy statement filed Jan. 7. Why? Some of the reasons make sense. The company's governance guidelines already require the board to review a succession plan each year, including identifying possible candidates for CEO. This review is confidential, however, because the company maintains that releasing the information could provide competitors with an unfair edge. As well, any formal succession plan would have the effect of informing executives within Apple that they are not being considered for positions.

However the vote turns out on Feb. 23, the bottom line is shareholders and the market are growing increasingly concerned about the long-term prospects for a Jobs-less Apple.
POSITION:  No positions in stocks mentioned.