Of Course Apple's Board Has Discussed Succession

There was a dispute about whether Apple Inc’s (NASDAQ: AAPL) board has formally discussed succession or even spoken with a large executive recruitment firm. Of course both things have happened. The issue would be talked about by Apple’s board even if CEO and founder Steve Jobs was not sick. It is not a matter of corporate governance. It is a matter of human nature.

The Wall Street Journal reported that one or more of Apple’s directors may have started looking — quietly and perhaps without telling Jobs — for someone to take Jobs’s place and perhaps even had a conversation with the chief of another tech company. Jobs sent the Journal an e-mail that reacted to the issue: “I think it’s hogwash.”

Many experts on board of directors’ fiduciary obligations have said the Apple board is required to talk about a future CEO. Apple is usually above such matters. There is no way to tell for certain whether the board has carried out what might be a governance obligation. The board may also assume that Tim Cook , Jobs’s No.2, will almost certainly be appointed to the position. Cook has acted as de facto CEO each time Jobs has been absent due to illness. An outsider brought into Apple’s delicate environment might upset the operation of the company. The environment’s balance is based on meticulous product development, manufacturing and marketing. The formula has been so successful that some may question why bring in someone who might want to “improve” it or try to adapt it to a new management philosophy?

Apple’s board is filled with people who have huge networks of connections. This includes the heads of Avon (NYSE: AVP) and Genentech, and the former heads of Northrup Grumman and Intuit. Among them, they could identify dozens of candidates and certainly talk about Jobs’ future in private. Who wouldn’t? The issue is so obvious. On the other hand, why bother? An outsider would only cripple a nearly perfect machine.

Douglas A. McIntyre