Apple shareholder proposal for more executive compensation oversight coming to vote in 2017

An Apple shareholder has filed a request that Apple implement independent oversight of executive compensation, and Apple's bid to deny the filing has failed, forcing the company to put the proposal to a shareholder vote.

Shareholder Jing Zhao declared to the U.S. Securities and Exchange Commission (SEC) on June 13 that Apple lacked "fair, just and ethical compensation principles" due to the company's lack of independent oversight by a single firm. Zhao quotes from Thomas Piketty's controversial "Capital in the Twenty-First Century" analysis and claims that compensation packages like Apple's, and other companies like it, have led to "rising inequality in the United States" from the selection of compensation committees in a "rather incestuous manner."

Publications by Zhao's group include "Prison Memoirs of an Anarchist," "Memoirs of a Revolutionary," "The Anarchist Lesson from the Spanish Civil War," and the "Chinese Anarchist Archives."

Apple attorney Gene Levoff countered the claims with the SEC in early October, saying that Apple's oversight was sufficient, the proposal as written was vague, and that Apple's evaluation team was allowed, and fully in compliance with NASDAQ rules.

After a response a week later by the original filer, the SEC has denied Apple's request to put aside the shareholder request, forcing the company to take the matter to a vote during the 2017 general shareholder's meeting, barring legal challenge.

Background of the filing, and the filer

Piketty's treatise, quoted heavily in the filing, decries concentrated wealth persisting even after industrialization contributed to rising worker wages, and quality of life, with only disruptive world wars and the great depression disrupting the pattern.

Zhao is the founder of the Comparative Policy Research Institute, a self-proclaimed "independent think tank focusing on comparative social, economical, political, and industrial policy issues" comprised mainly of Chinese researchers, scientists, economists, and engineers with experience in Japan that reside mainly in Silicon Valley. Zhao and has personally owned at least 30 shares of Apple stock since June 2014, according to memorandum attached to the SEC filing, making him eligible to make these requests of the company.

Publications by Zhao's group include "Prison Memoirs of an Anarchist," "Memoirs of a Revolutionary," "The Anarchist Lesson from the Spanish Civil War," and the "Chinese Anarchist Archives."

Apple's path forward

The shareholder's request won't necessarily be welcomed by the voters with open arms, however. The same individual requested Google form a wide-reaching "human rights" committee including evaluation of the same matter in 2010, and filed the same request using much the same wording with Goldman Sachs in 2013 which also ended in defeat.

Additionally, Apple has a wide berth in how it may put the matter to a vote. The proposal does not specify who must comply with the proposal specifically, how abstention votes are counted, which class of shareholder may vote, nor does it put forth minimum parameters for compliance.