Technology Pundits: Apple's Board: Between a Rock and a Hard Place Jun 24, 2009 – By Rob Enderle
Sometimes you have to feel sorry for Apple's board in that they both need
Steve Jobs and he is likely their biggest problem to deal with. It makes the
HP Board's problems with Carly Fiorina a few years back seem trivial by
comparison. Steve isn't the most forthcoming guy and he has a tendency to act
first and leave critical players, like his board, out of the loop. This can
be a real problem with current corporate disclosure rules which would seem to
outlaw much of what has been falsely or selectively disclosed on Steve Jobs
health over the last few months.
There are three things to watch for:
Al Gore
The current Obama administration is rabid about strong corporate governance
and complying with the rules surrounding corporate disclosure. Yet with the
most prominent democrat on Apple's board responding to what has going on
there with regard to false disclosures on Steve's health will be a challenge.
If they don't go after the company it will look like the administration is
specifically avoiding a prominent democrat and, if they do, they make another
democrat who is well regarded look like a crook. It gets worse in that Al
Gore is the poster child for fixing global warming and should he appear
compromised it might seriously damage an effort that many, including me,
think could save the human race. If Al Gore resigns from Apple it might
indicate a serious problem is coming for Apple, as long as he stays it is
likely that the Obama administration will leave the company alone.
Steve Jobs
Jobs is both Apple's greatest asset and their biggest problem. He is wedded
to the CEO Job and the company is tied tightly to him with Bloomberg likely
underestimating (http://www.bloomberg.com) his worth at around $20B to the
company. His health has made his dependability questionable and his ability
to actually do the job as he has defined it nearly impossible. He appears to
tie his own mortality, as many (http://www.socialsecurity.gov) do, to retaining the job which
actually means he likely feels the only way he is leaving is if is no longer
living and the stress of the job coupled with his weakened health makes that
more likely.
The Apple board can't back fill him without Steve acting to protect his job
and forcing the person the board selects out, and the board can't fire him
because that will result in the very problem they are trying to avoid near
term. They are seriously stuck with a problem they can't fix and yet will be
held accountable for. Watch for any drama between Jobs and anyone seemingly
positioned as his heir. The last true Jobs heir was Jon Rubenstein (http://en.wikipedia.org) and he was driven out of Apple some
time ago and currently runs Palm.
Apple Blogosphere
Apple has a deep network of Apple sites, bloggers, and analysts who receive
funding directly or indirectly from Apple and may have to begin disclosing
those connections as part of an FTC plan to regulate (http://www.readwriteweb.com) the Internet. Much of this
largely undisclosed network of compensated supporters will either suddenly
become visible and newsworthy or become a serious disclosure problem for the
company. This clearly won't just be an Apple problem (recall Microsoft got in
trouble for giving out Notebooks during the Vista launch) but they have the
deepest network of sites that are tied to commissioned sales and Apple is
known to provide free products to those that write favorably about them all
of which will suddenly become very visible. This is unless the FTC issues a
hands off Apple edict which, in and of itself (see Gore above) could be
problematic.
Watch for any change in Apple focused sites as the FTC ramps to enforce this
new rule, there are a number of ways to get around this expected rule
including shell companies, long term perpetual loaner products, and awards
based on fake contests all of which have been successfully used in the past
against similar rules and could come into play here. I've actually been told
that cars have been given to people (not from Apple) as loyalty awards using
the fake contest method suggesting that significant hidden compensation is
possible within or outside of this far from comprehensive list.
Wrapping Up:
Apple has some unique issues and it will be interesting to see how the
company adjusts to the risks these issues represent. I really don't envy the
Apple board this year.
Technology Pundits: Apple's Board: Between a Rock and a Hard Place
