* Apple's board likely to take on bigger role
* Governance more crucial if Apple loses magic
* Board seen less deferential with Cook as CEO
By Dena Aubin and Nick Carey
NEW YORK, Aug 26 The departure of Steve Jobs
as Apple's CEO is likely to trigger some major changes for the
Rather than acting as mere advisers to one of the world's
great visionary leaders, the board may have to take more
control, be less deferential to the new CEO Tim Cook than it
was to Jobs, and meet more often.
"Over time that board is going to have to step up to
greater responsibility and a more traditional role," said Jim
Post, a professor of management at Boston University School of
Jobs, after a lengthy battle with a rare form of pancreatic
cancer and other health problems, on Wednesday said he could no
longer fulfill his duties at the world's most valuable
technology company and handed the CEO reins to his long-time
lieutenant Cook. For details click on [ID:nN1E77O156].
Initially at least, the board will be chaired by Jobs
himself, though there are questions over whether he will be in
that position long, or play a major role, given the state of
The creation of a chairman's position is a first step in
restructuring the board. Apple was one of the few U.S.
companies that lacked a chairman, raising concerns that there
was no one to balance the power of the CEO.
The company had defended the lack of a chairman, saying it
was in the best interests of the company and shareholders for
the CEO to instead interact with two co-lead directors, Art
Levinson and Andrea Jung.
That leadership structure "enhances the board's oversight
of and independence from management...and the company's overall
corporate governance," Apple had said in a proxy statement in
BOARD'S LIGHT TOUCH MAY CHANGE
Yet Apple's corporate governance had raised questions.
"You could ask how much control Jobs has exercised over the
board and some would argue that it was quite a lot," said
Charles Elson, director of the Weinberg Center for Corporate
Governance at the University of Delaware. "The problem is we
just don't know much about Apple, it's pretty opaque."
There were signs that Jobs has at times kept the board in
the dark. Over the past two years, for example, board members
have confided to friends their concern that Jobs, in his quest
for privacy, wasn't being forthcoming with directors about the
true condition of his health.
The board doesn't, on the surface at least, appear to have
been the most active.
According to executive search firm Spencer Stuart, it met
just four times in 2010 -- a year in which the company launched
the iPad, and faced growing concerns about Jobs' health, as
well as a public relations black eye over antenna issues on the
iPhone 4. By comparison, boards in the S&P 500 index overall
met an average of 8.6 times.
That may change now that Cook is in charge.
"The board has to be thinking hard about the new
responsibilities that they're going to have to step up to,"
said Post from Boston University. For example, it may be
challenged to hang on to Apple's leadership team, which was
held together in some part by Jobs' magnetism, Post said.
In Jobs' three health-related absences in recent years,
Cook has taken over the helm.
But the 50-year-old Alabama native, a former Compaq
executive and an acknowledged master of supply-chain
management, remains largely untested in Wall Street's view. He
wasn't even on the Apple board before this week -- also unusual
for someone who had been the No.2 executive in a company.
Overall, he is being viewed as a safe bet to run Apple's
sprawling empire, but it would be difficult to find many people
who think Jobs won't be badly missed.
COOK MAY FACE TOUGH QUESTIONS
Cook's biggest test will come after the launch of the
products that are in the pipeline for the next year or so --
which are seen as having the Jobs' imprint on them.
If product development slows after that, it will be up to
the board to begin asking tough questions of Cook, corporate
governance experts said.
The board is not lacking experience. But whether some of
its members, mainly CEOs or former CEOs, have much time to
commit to their Apple roles is another question.
For example, co-lead director Jung also runs Avon Products
Inc (AVP.N), the world's largest direct seller of cosmetics
with 40,000 employees, and serves as a director or trustee for
Another director, Millard Drexler, is chief executive of
retailer J. Crew Group, while director Al Gore, the former U.S.
Vice President, serves as partner of venture capital firm
Kleiner Perkins Caufield & Byers and chairs another investment
The board is also smaller than average, with just eight
members, up from seven before this week's change, versus an
average of 10.7 members for S&P 500 companies, based on the
Spencer Stuart data.
Of course, the light touch has not raised many eyebrows
while Apple has been prospering -- its shares have risen more
than five-fold in the past five years -- but it would be
surprising if such an astonishingly smooth ride could
Corporate governance pioneer Robert Monks pointed to
Microsoft Corp (MSFT.O) as an example of how the star quality
can dim. Its shares have slipped in the past 10 years even as
sales and earnings have climbed.
"There comes a time when the magic isn't there and they
become ordinary companies...then you begin to worry about
governance," he said.
(Additional reporting by Poornima Gupta. Editing by Martin