Apple's Annual Shareholder Meeting (2009)

Apple, Inc. (AAPL) held its 2009 annual shareholder meeting on February 25, 2009. The meeting took place at Apple's Cupertino, CA headquarters. The majority of shareholder attendees appeared to be 45+ years old (the sea of white hair in the room was noticeable). Apple sometimes offers some food on the second floor, but this year, only coffee and tea were available. I noticed an inspiring mural above the coffee canisters titled, "To the crazy ones." The full text is below, and it complemented pictures of famous non-conformists, including Muhammad Ali, Cesar Chavez, and John Lennon (I did not recognize the man on the top upper left hand side--if anyone knows who he is, please add a comment).

Here's to the crazy ones.
The misfits. The rebels.
The troublemakers. The round
pegs in the square holes - the
ones who see things differently.
They're not fond of rules and
they have no respect for
the status quo. You can praise
them, disagree with them,
quote them, disbelieve them,
glorify or vilify them.
About the only thing that you
can't do is ignore them.
Because they change things.

- Jack Kerouac
quoted in an Apple Computer Ad, 1997
(search youtube.com to see the ad)

It's the perfect way to summarize Apple's image, isn't it? Unfortunately, this year's meeting was uneventful due to the absence of Steve Jobs. The only other "celebrity," Al Gore--who is on Apple's board of directors--appeared again this year and was noticeably more trim. After Apple's general counsel, Dan Cooperman, concluded the formal part of the meeting, COO Tim Cook made a short presentation. Tim Cook appeared in jeans and a black collared shirt. If memory serves me well, Steve Jobs appeared in a black turtleneck and jeans last year. Mr. Cook appeared to be doing his best to mimic Steve Jobs, even using some of his mannerisms. Overall, Mr. Cook did a good job, but unconsciously or not, he's trying to copy Steve Jobs. It won't work--no one has Mr. Jobs' charisma, so Mr. Cook eventually needs to find his own style.

Before the Q&A session began, Mr. Cook emphasized some sales results. He said Apple had sold 55 million iPods in 2008. Apple had also sold 13.7 million iPhones in 2008, surpassing its goal of selling 10 million. Meanwhile, iTunes was a raging success--Mr. Cook noted that Apple was the #1 music reseller, asking "Do you know who number two is? Wal-Mart! Can you believe that Apple sold more of something than Wal-Mart?"

The Q&A session itself was disappointing. After another shareholder called everyone socialists for advancing health care and environmental proposals, the running joke was "socialism." People jokingly said they were not socialists, used the word "socialist" whenever possible, and Mr. Cook opened the floor to questions from "conservatives and socialists alike." In any case, here is a short summary of the Q&A session:

1. Apple has "no comment" on the SEC investigation relating to Steve Jobs' health and a possible late disclosure of his health. (By the way, I am surprised Apple's lawyers don't cite the California Constitution and its right to privacy whenever this issue comes up--yes, an individual's health is important to a company, but it's also a private matter, and forcing a corporate officer to provide updates about his health would seem to violate the California Constitution. I realize the SEC is a federal agency and therefore not obligated to follow state law, but I don't see a direct conflict here--California's right to privacy is an extension of the federal right to privacy found in the U.S. Constitution.)

2. In the most lighthearted moment, an Apple shareholder asked everyone to stand up and sing Happy Birthday to Steve Jobs, whose birthday was yesterday. Most shareholders complied and delivered a rousing birthday song to Mr. Jobs. (You can't understand how devoted Apple shareholders are to Steve Jobs until you see the love in person--even when he's not there, shareholders make a point to include him.)

3. Another shareholder questioned Apple's diversity efforts. Its board of directors appears to be almost all Caucasian. (Apple does have an Iranian/Persian officer, Sina Tamaddon, as well as board member Andrea Jung of Avon Products, Inc., but like most companies, could use more diversity in its upper ranks.)

4. Another shareholder questioned why Apple pulled out of MacWorld. Mr. Cook responded that it had "other ways to reach many more customers."

5. A shareholder brought up Apple's advertising on risque shows, such as Two and Half Men. I thought the shareholder's comments backfired--she made explicit sexual references from the show, which must have been embarrassing, and probably got more people to become interested in watching Two and a Half Men.

The most interesting substantive issue was Apple's refusal to implement a shareholder proposal that passed last year. (This year, other than the re-election of directors, all shareholder proposals failed to pass.) Last year's successful proposal related to "Say on Pay" and executive compensation. I was very surprised to learn that when it comes to shareholder proposals, Apple operates like the Electoral College--a majority vote isn't enough to actually win. This was made all the more ironic by the presence of former presidential candidate Al Gore. It appears Apple is an iconoclast in every sense of the word--even when it means ignoring successful shareholder proposals. This seeming rebuke to shareholders won't dampen Apple's base, though. As long as Steve Jobs is around somewhere, shareholders will come to the Apple temple every year to engage in their own version of honoring their esteemed leader.

FYI: I was quoted briefly in this Reuters article:

http://blogs.reuters.com/mediafile/2009/02/26/apple-annual-meeting-proves-entertaining/

In case you're interested in another perspective, here is a shareholder meeting review I found to be accurate (except for the spelling of (Shelton) "Ehrlich"):

http://www.appleinsider.com/articles/09/02/25/apple_shareholder_meeting_dominated_by_politics.html

Disclosure: I own an insignificant number of Apple (AAPL) shares.