Jobs Irks Institutional Shareholders

Apple's (Nasdaq: AAPL) annual meeting on Thursday was marked by pointed questions from shareholders and perhaps just as pointed resistance to answering by board members. The meeting followed close on the heels of Apple's announcement in April of its most profitable quarter in the company's history, a fact that CEO Steve Jobs surely would much rather have focused on at the gathering.

Shareholders voted down a proposal by institutional shareholders, including several pension plan investors, to change the company's procedures for dating stock option grants to employees. In addition, the slate of directors as proposed by the company was voted into office, despite efforts by some institutional shareholders to hold off on the election of directors due to unhappiness with the way corporate governance issues have been addressed.

Jobs' Comments 'Offensive'

Perhaps what has roiled shareholders the most, though, is the fact that Jobs used his trademark humor to deflect inquiries during the Q&A session.

"I guess Steve Jobs believes in the old adage: Being offensive is the best defense," Patrick McGurn, executive vice president and special counsel for Institutional Shareholder Services, told MacNewsWorld. ISS gives advice to institutional shareholders on how they should vote the proxies they hold, and the firm has been active in the push for improved corporate governance.

Jobs tried to put a punctuation mark at the end of the stock option backdating conversation, saying that unless stockholders believed that the SEC (Securities and Exchange Commission) was involved in a conspiracy to cover up problems, then the audience had to accept that all current officials at Apple had been correctly cleared of wrongdoing by the agency.

"Making light of a serious offense such as backdating is seriously goofy," McGurn said. "I'm also guessing that the folks over at the SEC aren't too happy about being the stars of Jobs' PR campaign."

McGurn drew a comparison with another scandal-besieged corporate chief, noting that "it almost looks like Steve Jobs was doing a bad imitation of Home Depot's (NYSE: HD) [former] CEO Bob Nardelli."

Eyes on the Road

While the governance scandal rolls on, Apple continues to push for brand prominence in new markets. The company is set to release its much-anticipated iPhone in June, a device targeted to do for Apple in the cell phone market what the iPod accomplished in the MP3 player realm -- that is, secure device dominance.

In fact, Apple says that it is pushing so hard to meet the June release date that it has pulled resources from its operating system development team to make the iPhone project work, a move that will delay release of the Leopard version of the Mac OS X operating system.

In addition, Apple is fast adding video content to its iTunes online media store and is pushing its wired-home concept with the Apple TV device, which recently began shipping. All the while, it continues to fight for a growing market share for its computer line. When releasing Apple's second fiscal quarter results at the end of March, Jobs said that sales of the Macintosh computers are growing at a rate of 36 percent -- triple the industry's overall rate of growth.

Putting the Issue to Bed

It is not surprising, then, that the company is seeking to refocus media attention from the recent controversies over stock option backdating and executive compensation to its new product announcements. The last year has been marked, though, by continued accusations that Apple was misgoverned.

Financier Fred Anderson, who served as Apple's CFO from 1996 until 2004, resigned from the company's board last October and recently settled a case with the SEC relating to the options backdating scandal.

Since then, a public conversation has been heating up over who is responsible for alleged accounting glitches and whether or not Steve Jobs should be held accountable for the extent -- or the impropriety -- of options backdating that took place until as late as 2002, according to the company's own admission.

Still, Apple is officially ignoring the public fray, going as far as to release an official statement from board members Bill Campbell, Millard Dresler, Al Gore, Arthur Levinson, Eric Schmidt and Jerry York that states their intention to stay out of the "public debate."