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Apple today issued its Preliminary Proxy Statement via its Investor Relations website. As a publicly traded company, Apple issues this document annually, and it discusses pay packages for both executive team members and board members, company practices, and topics which shareholders will vote on at the upcoming shareholder meeting. Apple says that the next shareholder meeting will take place on February 28, 2014. Some interesting tidbits include that Apple’s board met seven times in 2013 with 75%+ attendance during each meeting. Additionally (to be voted on), a shareholder wants Apple to create a board committee related to human rights. Apple says that it is against this additional committee:

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Apple says that it is against that additional group for several reasons:

The Company is committed to the highest standards of social responsibility and human rights wherever we do business. The Board is aware of no other company that does as much to safeguard and empower workers as the Company does today.

The Company’s dedicated Supplier Responsibility team continually audits suppliers for compliance with the Company’s industry-leading Supplier Code of Conduct. The Supplier Code of Conduct is based on widely recognized international human rights principles as defined by the United Nations and the International Labor Organization.

 The Company’s Supplier Code of Conduct, the results of its auditing efforts, a list of the Company’s leading suppliers, and additional information on the Company’s Supplier Responsibility program are available at http://www.apple.com/supplierresponsibility.

The Company’s auditing program has expanded in breadth and depth over the past several years. In January 2012, the Company became the first electronics company to be granted membership in the Fair Labor Association (the “ FLA ”), a leading non-profit organization dedicated to protecting the rights of workers. The FLA’s independent auditors have unrestricted access to any facility in the Company’s supply chain at any time.

In addition to monitoring and driving improvements for workers in the supply chain, the Company places strong emphasis on education and worker empowerment initiatives. The Company has established a training program for new employees at the Company’s suppliers to inform them of their individual rights, local laws and the Company’s Supplier Code of Conduct. Millions of workers have participated in this training program.

The Company also partners with educational institutions to offer free college-level courses to workers who make the Company’s products. Hundreds of thousands of workers have attended these classes since 2008, and many have gone on to earn associate’s degrees. The Company recently expanded this educational program to offer more opportunities for participants to work toward a bachelor’s degree.

The Company is also active in protecting human rights and upholding its social responsibilities as they relate to its own employees throughout the world. The Company encourages a creative, culturally diverse and supportive work environment, and does not tolerate harassment or discrimination. To support the Company’s culture of inclusion, all employees are expected to respect the diverse ideas, experiences and backgrounds of all with whom we do business. In December 2013 the Company was awarded its 12th consecutive perfect rating from the Human Rights Campaign’s annual Corporate Equality Index, which scores businesses based on lesbian, gay, bisexual and transgender workplace policies, and won the title of “Best Places to Work for LGBT Equality.”

The Board does not believe that establishing a committee is an effective way for the Company’s practices and goals to continually evolve and improve in response to changing conditions. Instead, such an additional and redundant committee would distract the Board from its other responsibilities to the Company and its shareholders, while adding little value to the Company’s existing commitment to human rights and social responsibility. The Company’s existing governance framework has produced a strong commitment to human rights and progress that is evident in the Company’s practices and policies.

The document also sheds light on the payment packages for some of Apple’s executives:

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The executive pay packages in 2013 for Tim Cook, Eddy Cue, Dan Riccio, Peter Oppenheimer, and Jeff Williams are revealed (above). These salaries are separate from the awarded shares to vest of the next several years. For instance, Tim Cook’s stock award for replacing Steve Jobs as CEO in late 2011 will partially vest in 2016 and then again in 2021. In 2013, Cook made a couple of hundred thousand dollars over $4 million, while the other executives made approximately $2.6 million each.

Apple also believes that shareholders should vote against the cash balance proposals from Carl Icahn:

The Company has been advised that High River Limited Partnership (“ High River ”), 767 Fifth Avenue, 46 th Floor, New York, New York, 10153, a record holder of 1,000 shares of the Company’s common stock, intends to submit the following proposal at the Annual Meeting on behalf of itself and Icahn Partners LP, Icahn Partners Master Fund LP, Icahn Partners Master Fund II LP, Icahn Partners Master Fund III LP, and other beneficial owners, including Mr. Carl Icahn:

“RESOLVED, that the shareholders hereby approve, on an advisory basis, High River’s proposal that Apple commit to completing not less than $50 billion of share repurchases during Apple’s fiscal year ending September 27, 2014 (and increase the amount authorized for share repurchases under its Capital Return Program accordingly).”

The Company’s Statement in Opposition to Proposal No. 10

The Board recommends a vote AGAINST Proposal No. 10.

The Board and management team are thoughtfully considering options for returning additional cash to shareholders and are currently seeking input from shareholders as part of the Company’s regular review.

The Company’s success stems from the Company’s unique ability to combine world-class skills in hardware, software and services to deliver innovative products that create new markets and delight hundreds of millions of customers. This success has created tremendous value for the Company’s shareholders.

With breakthrough products and services such as the Mac, iPod, iPhone, iPad and App Store, the Company has created huge market opportunities, and the Board and management team believe the opportunities that lie ahead are just as exciting. Given such large and global markets, the Company competes with large companies around the world, many with their own significant technical capabilities and significant capital. This dynamic competitive landscape and the Company’s rapid pace of innovation require unprecedented investment, flexibility and access to resources.

Successfully innovating and executing against these large opportunities also requires careful stewardship by the Board and management team, and the Company’s evaluation of capital return is conducted in the context of supporting the Company’s continued business success and desire to deliver attractive returns to long-term shareholders.

The Board and management team have demonstrated a strong commitment to returning capital to shareholders over the past two years. In March 2012, the Company announced a quarterly dividend and share repurchase program totaling $45 billion. In April 2013, the Board authorized a dramatic increase, more than doubling the size of the program to $100 billion, raising the dividend, and increasing the share buyback authorization to $60 billion. As such, the Company is one of the largest dividend payers in the world and has the largest share repurchase authorization in history. The Company has executed aggressively against the capital return program, spending $23 billion of the $60 billion share repurchase authorization in fiscal 2013 alone. These share repurchases have been funded in part by a $17 billion debt offering, the largest ever as of the time of issuance.

In the first six quarters of the capital return program, dividend payments and share repurchases totaled over $43 billion. Dividends and share repurchases must be funded by domestic cash, and the Company has returned to shareholders or invested all of the domestic cash generated by its business and raised through the issuance of debt since the beginning of the program.

 While the Board and management oppose this shareholder proposal, they are fully committed to returning cash to shareholders. The Board and management team believe that capital should be returned to shareholders on an efficient and sustained basis, and that the evaluation of capital return should be performed regularly and carefully with the best long-term interest of the business and shareholders in mind.

The Company is updating perspectives on its capital return program for 2014 and beyond. The Company is collecting input from a very broad base of shareholders, believing that the input of all shareholders is important and should be considered holistically. The evaluation of the capital return program continues to be thoughtful, deliberate, and consistent with a conservative financial policy that supports risk-taking and innovation. Consistent with its pattern for the last two years, the Company is on track to complete its regular review and thorough analysis and to announce any changes to the current program by March or April of 2014.

The Board believes that the Company’s management team and Board are in the best position to determine what is in the best long-term interest of the Company’s business and recommends a vote AGAINST this proposal.

Vote Required

Approval of Proposal No. 10 requires the affirmative vote of (i) a majority of the shares present or represented by proxy and voting at the Annual Meeting and (ii) a majority of the shares required to constitute the quorum.

Recommendation of the Board

The Board recommends a vote AGAINST Proposal No. 10.

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16 Responses to “Apple issues Preliminary Proxy Statement, urges shareholders to vote against Icahn proposal & Human Rights Board committee”

  1. rogifan says:

    Anyone know why Jony Ive isn’t named as an executive officer in Apple’s SEC filings? Does this mean that even though he’s an SVP and reports to Tim Cook his position isn’t at the same level as the other SVPs?

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    • kpom1 says:

      In SEC filings, only 5 highest paid officers are required to be disclosed in the proxy. For all we know, Ive is paid $1 less than the others just to stay off the list. In any case, the next interesting filing will be when they reveal how much in restricted stock they gave Angela Ahrendts to jump ship from Burberry.

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      • rogifan says:

        But Ive isn’t even listed as an executive officer, all the others are. I wonder if it was his choice so he wouldn’t have to disclose when he’s granted options or when he sells stock. Last year he bought a $17 million house so obviously he’s well compensated.

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    • What can one do with a $17 million house? Overkill I’d say. A $1 million house would be more than adequate. Imagine cleaning that place! Oh wait, theres maids to do that for him. Meanwhile in Africa children are dieing everyday from starvation.

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      • Yes but the Maids are eating..?

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      • rogifan says:

        It’s not the house it’s the location.

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      • Ive deserves the money he gets. He is one of the top designers in the world. And I don’t think its your decision to say whats the right price for a house. This man obviously used very sophisticated and expensive designs to build it, so its obvious that it’ll be expensive. Since I guess the house has an amazing location this must’ve also cost a lot of money.

        Stop being so jealous.

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      • rlowhit says:

        I have yet to see you post anything but negative comments here. Do you do this on your own or does Samsung pay you per post?

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      • Tallest Skil says:

        Hey. Imbecile. How about you just shove your Nexus S up your posterior and find a new site to ruin.

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      • The amount of trolling here is so high because of one comment. Guys chill. $17 million is way too much, nobody needs such a house really. As for the Samsung/nexus whatever comments, I use Apple iPhone 5S, iPad, iMac e.t.c. but that dosen’t make me blind to “real life” either.

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      • Tallest Skil says:

        >>The amount of trolling here is so high because of one comment.

        Nice try, moron.

        >>$17 million is way too much, nobody needs such a house really.

        That’s not for you to say. Get over yourself.

        >>I use Apple iPhone 5S, iPad, iMac e.t.c. but

        Stop being a worthless idiot. That’s all we want. Go ruin some other site. Never post here again. We see straight through your pathetic nonsense.

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      • Wow, the rumours really are true. Make one criticism and Apple “fan boys” are all over you with their illogical gibberish.
        I like Apple and the people there and its products, but that shouldn’t have to make me blind.
        I think you guys lost a bit of your perspective when you cannot see that a $17 million dollar home for one guy (and perhaps his family) is rather overkill. Not saying that he dosen’t deserve the money he earns or anything like that, just that wasting so much money on a home is alarming, when it could have been put to much better use helping others.

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      • Oh really? Some african kids would say 1M is overkill either. And some bush people would say 100K is way too much. And some tahitians would call 1k house an overkill. After all, who can draw the line?

        As for me, cognac in Denmark is just criminally overpriced, but who am I to teach them about pricing?

        Andre, be a man, sell all your iDevices and feed some african kids. This is way more productive than posting your nonsense here.

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      • Take a look at what type of house a $1Million can get you in the SF Bay Area. You can barely afford a small condo in SF or an old basic 2b/2b house anywhere else (excluding the East bay, which I don’t think it would be a good option for JI)

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  2. Glad that we live in a country where one can spend his/her money as he/she pleases !

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  3. Apple also opposes my proxy access proposal, which would allow shareowners to place director nominees on the proxy. Under the current board configuration, it would allow two parties to nominate one director each and they would be prohibited from coordinating campaigns. Apple opposes it because it could result in groups with a “specific agenda” nominating. Of course, they wouldn’t get elected unless more shareowners voted for them than for incumbents or board nominees. Personally, I’d love to be able to vote for a director with a “specific agenda.” Let’s hear what they stand for. What’s the specific agenda of incumbents?

    A second reason they give is the threshold to nominate is too low. Yes, you get to nominate if you or your group owns $5B in stock. How many of you own $5B? If you can gather a group with that much stock, coordinate the group, agree upon a candidate and then run that candidate and win I would bet that candidate would offer more than the board nominee who loses to them.

    We need directors who can address the big money pile… not with short-term buyback strategies but with long-term strategies. Investing $150B in Treasuries is not efficient use of our money. The returns of Google Ventures are far above the industry’s mean. There is no reason why Apple couldn’t also put its money to good use though an Apple Ventures type of vehicle. All we need are a couple of imaginative directors nominated by, elected by, and working for shareowners.

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