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CEO Tim Cook should care, and I am sure he does, but he has a built-in cushion. The day he was named CEO, August 24th, 2011, AAPL shares closed at a split-adjusted price of $53.74. So he has a long way to go to be labeled a long-term value destroyer. That said, it is clear that the market has soured on Apple's growth prospects, and in the past year Apple's market value has declined by an astounding $192 billion. That value destruction itself would rank as the 20th largest stock in the S&P 500, between the values of
Ultimately, though, it is the Board of Directors that would put pressure on Cook to spark some renewed growth in Apple's revenues and create a sense of wonder that his predecessor, Steve Jobs, did better than any other corporate executive in recent memory. Also, CFO Luca Maestri has to figure out a way to corral Apple's rampant cash hoard, which is threatening to give the iconic tech company the valuation of a bank, not a desired outcome.
Has there been enough value destruction to create pressure on senior management in Cupertino? My guess--and it's only a guess--is no. A look at the composition of the Board shows my rationale. It's not exactly a murderer's row of corporate governance.
The best thing about Apple's Board is that it is not helmed by Cook. He is CEO, but not Chairman. Splitting the titles of Chairman and CEO meets governance best practices and requires the CEO to answer to a higher authority. He is the only management representative on an 8-person Board, another aspect of Apple's governance that would qualify as a best practice.
Apple's Chairman is Arthur Levinson, former CEO and current Chairman of Genentech. He joined Apple's Board in 2000 and took over from Steve Jobs as Chairman in November 2011, shortly after Cook was named CEO. Along with Mr. Levinson, Apple's Board includes Bob Iger, Chairman and CEO of Disney, two former aerospace executives, James Bell and Ronald Sugar, and Susan Wagner of BlackRock. The Board also includes Andrea Jung, CEO of Grameen America, a microlending NPO, and, bizarrely enough, Al Gore.
Why two retired aerospace execs? Why are there no representatives from companies that make consumer products? Why are there no "techies" other than Levinson on the Board of a company that is headquartered in Silicon Valley? What possible reason--though his role on the Compensation Committee certainly fits his his experience since his political career ended ignominiously in November 2000--could there be for the inclusion of Gore?
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In my experience the most likely Boards to produce rabble-rousing are those led by the company's founder. "What have you done with my company?" It's a common refrain as the Chairman gets back into the mix and is generally a good thing for shareholders. Sadly, that's not an option for Apple, as Mr. Jobs and his genius are no longer with us. So, AAPL shareholders are left with Art Levinson and his cronies to put the pressure on Cook and his team to deliver.
Based on the composition of the Board, my guess is that pressure never materializes and Apple shares continue their long, slow decline. The iPhone 7 is becoming a litmus test for Apple's relevance and its rumored September launch will be a capstone date for Cook's leadership. Until I start reading stories with the headline "Cook's Job Is On The Line With The iPhone 7 Launch," though, I won't be interested in AAPL shares. If the Board doesn't think that product launch is important enough to put management's careers on the line, then I can't put my clients' money on the line by owning AAPL shares.
