Apple filed with Apple notified the U.S. Securities and Exchange Commission that it will be holding its annual shareholder meeting at 9 a.m. Pacific on Feb. 27 to discuss proposals from the company's board of directors.
According to the SEC filing, the meeting will be held at Apple's 1 Infinite Loop campus in Cupertino, Calif., where stock holders of record as of Jan. 2, 2013 can attend and vote for the various proposed measures.
In a letter addressed to shareholders, Apple Senior Vice President and General Counsel Bruce Sewell offered a brief summary of the proposals up for vote, including the election of Apple's board of directors, ratification of Ernst & Young as its independent accounting firm, an advisory vote for executive compensation and two shareholder proposals.
One important measure up for vote is an amendment to the company's articles of incorporation that will eliminate language from the document to facilitate the adoption of majority voting for directors. The move is connected to an announcement at the 2012 annual meeting in which Apple informed shareholders that it would be implementing majority voting in its Articles and bylaws.
In the same measure, the board is looking to eliminate so-called "blank check" preferred stock. Apple has not issued such shares since 1997 and the board does not intend to do so in the future. If the amendment is passed, any future preferred stock would have to be approved by shareholders before being issued.
Finally, the proposed amendment would establish a "par value" of $0.0001 per share for Apple common stock. While the company does not currently have a par value, it believes that establishing one will reduce corporate expenses.
The board recommends that all four proposals be passed.
Shareholder Proposals
The first shareholder proposal, titled "Executives to Retain Significant Stock," comes from James McRitchie and asks the Compensation Committee to adopt a policy that requires senior
executives to retain a "significant percentage" of company shares acquired through equity pay programs until reaching normal retirement age. According to the proposal, requiring executives to hold significant stock would motivate higher performance and ensure future success.
McRitchie points to CEO Tim Cook's "mega-grant" of one million restricted stock units that held a grant date value of over $376 million at the time. Half of the shares vest in five years while the remainder will vest in ten years. The concern is that the large awards have no performance requirements for vesting.
The board disagrees with proposal and said the current pay structure and practices are "firmly aligned with shareholders’ interests and encourage executives to focus on the Company’s long-term performance."
The second shareholder proposal comes from John Harrington and is entitled "Board Committee on Human Rights. If voted through, the measure would establish a Board Committee on Human Rights that would "review the implications of company policies, above and beyond matters of legal compliance, for the human rights of individuals in the US and worldwide, including assessing the impacts of company operations and supply chains on resources and public welfare in host communities." The proposal targets widespread reports of alleged labor abuse from Apple's Chinese
manufacturing partner Foxconn.
The board opposes the proposal, saying Apple is already committed to the highest standards of social responsibility and human rights. As an example, the company points to its Supplier Code of Conduct and membership in the Fair Labor Association, which performs routine independent inspections of final assembly suppliers.