Daily Management Review

Corporate bylaw Changes will now allow Apple’s Large Investors to Nominate Members to the Company Board


Corporate bylaw Changes will now allow Apple’s Large Investors to Nominate Members to the Company Board
Handing over greater control to its big investors, Apple Inc has amended its corporate by laws that would allow shareholders to nominate new board members. It is the latest of the US companies to empower the shareholders and investors in relation to control over the company.
As major institutional investors including BlackRock and T Rowe Price and many of the largest US pension funds have demanded improved shareholder rights,  the issue of so-called proxy access has gone from a fringe issue to mainstream practice in just two years.
The change in the corporate laws of the company would now allow its investors — either alone or working as a group — to nominate a board member. Apple, the world’s most valuable company, Apple now tops a growing list of such corporations that have empowered its investors to have a representative on the board.
However only those investors would be considered who have held at least 3 per cent of the company’s shares for at least three years.
Since the current market capitalization of Apple is just under $600bn, it means that the investors would need to hold stock worth almost $18bn to qualify.
Earlier in this year, proxy access rights to the company board was allowed by companies like Microsoft, Coca-Cola and Philip Morris International which are among the more than 50 members of the S&P 500 index to have done so.
More than 100 resolutions were put forward by pension funds led by the New York City Employees' Retirement System and Calpers in California at shareholder meetings around the US this year demanding proxy access. These large investors in various companies have pledged to target dozens more companies next year.
Choosing directors is a task best left to the board of a company, opponents of proxy access say, and that the shareholders having a vote on their choices. Rather than face a showdown with investors at a public meeting, this year has seen a growing number of boards decide to offer the new rights to the investors.
With attempts at improving the transparency of its supply chain practices to the introduction of more performance-related compensation for its executives, the latest move by apple to open up its corporate governance is being viewed as a part of the reforms that are being undertaken under its chief executive Tim Cook.
In a move that had been long sought by corporate governance campaigners, a narrow majority of Apple shareholders approved majority voting for the election of directors in 2014. A shareholder proposal demanding proxy access was defeated but attracted significant support, with 39 per cent of votes cast in favor of the change at the most recent annual meeting f the company held in March this year.
A group of up to 20 shareholders can nominate up to 20 per cent of Apple's board, or one of its eight directors according to the new corporate by laws of Apple Inc which were updated on Monday and revealed in a regulatory filing on Tuesday.
Apple declined to comment beyond Tuesday's filing.

(Source: www.cnbc.com)