At Apple’s annual meeting of shareholders, CEO Tim Cook got visibly angry.
“Cook saved his choicest remarks for shareholder Justin Danhof, director of the National Center for Public Policy Research’s [NCPPR] Free Enterprise Project,” Chris O’Brien reports for The Los Angeles Times. “Danhof had spoken earlier in the meeting, criticizing Apple’s connection to trade industry groups that believe people are causing global warming. Later, Danhof asked Cook if he would promise to commit to projects that help the environment or fulfill other social justice aims only if they also help Apple’s bottom line.”
“Cook seemed to be trying not to jump out of his seat,” O’Brien reports. “‘When we work on making our devices accessible by the blind, I don’t consider the bloody ROI’ (return on investment), Cook said. Bloody! ‘When I think about doing the right thing,’ he said, ‘I don’t think about an ROI… If that’s a hard line for you, then you should get [out] of the stock.'”
Full article here.
“[NCPPR’s] shareholder proposal was rejected by Apple’s shareholders, receiving just 2.95 percent of the vote. During the question and answer session, however, the NCPPR representative asked Mr. Cook two questions, both of which were in line with the principles espoused in the group’s proposal,” Bryan Chaffin reports for The Mac Observer. “The first question challenged an assertion from Mr. Cook that Apple’s sustainability programs and goals—Apple plans on having 100 percent of its power come from green sources—are good for the bottom line. The representative asked Mr. Cook if that was the case only because of government subsidies on green energy.”
“Mr. Cook didn’t directly answer that question, but instead focused on the second question: the NCPPR representative asked Mr. Cook to commit right then and there to doing only those things that were profitable,” Chaffin reports. “What ensued was the only time I can recall seeing Tim Cook angry… As evidenced by the use of “bloody” in his response—the closest thing to public profanity I’ve ever seen from Mr. Cook–it was clear that he was quite angry. His body language changed, his face contracted, and he spoke in rapid fire sentences compared to the usual metered and controlled way he speaks.”
Full article here.
Resolved: Shareholders of Apple, [sic] Inc. (“Apple”) urge the board of directors (the “board”) to authorize the preparation of a report, updated annually, disclosing:
1. Apple’s membership in any trade association or organization that educates members about sustainability practices, assists members in the development of sustainability practices, encourages members to engage in sustainability practices or requires members to undertake sustainability actions.
2. Payments made by Apple to trade associations or organizations of which Apple is a member that meet any of the definitions set forth in #1, above.
3. Registration with, membership in or subscription to any independent sustainability rating processes, registries and/or organizations to which Apple makes payments that rate Apple products for sustainability purposes and intentionally make results of such evaluations, in whole or in part, available to the public.
4. The amount of payments made by Apple to entities that meet any of the definitions set forth in #3, above.
The report, excluding proprietary information and information related to legal compliance, shall be presented to the Audit and Finance Committee of the board or other relevant oversight committees of the board and posted on Apple’s website.
For purposes of this proposal, “sustainability” refers to practices relating to the conservation of energy or physical resources; “trade association” refers to, as defined by Merriam-Webster, “an association of tradesmen, businessmen, or manufacturers in a particular trade or industry for the protection and advancement of their common interests”; “independent” refers to organizations or entities not owned or wholly controlled by Apple or by any government body or agent thereof; “payments” refers to fees paid for membership, subscription or registration purposes to sustainability ratings organizations or their parent organizations or agents and does not refer to nor include fees paid to news media organizations, including trade publications, their parent companies or agents, or any payments made solely for advertising purposes.
Some trade associations and business organizations have expanded beyond the promotion of traditional business goals and are lobbying business executives to pursue objectives with primarily social benefits. This may affect Company profitability and shareholder value.
The Company’s involvement and acquiescence in these endeavors lacks transparency, and publicly-available information about the Company’s trade association memberships and related activities is minimal. An annual report to shareholders will help protect shareholder value.”
The Board recommends a vote AGAINST Proposal No. 9.
The Company believes that selective participation in trade associations and business organizations is in the best interests of the Company and its shareholders. The Company is constantly monitoring and reviewing its participation and membership in associations and initiatives, and believes the reporting that would be required by this proposal is not necessary to protect shareholder value.
Participation in trade organizations can provide significant benefits to the Company and its shareholders. For example, participation in a trade organization may be an effective way to support specific policy initiatives or positions the Company believes will be in its best interests. The Company carefully chooses which organizations to join and chooses only those that advance the Company’s business interests.
The proposal alleges that some trade associations are lobbying business executives to pursue objectives with primarily social benefits. This is not consistent with the Company’s experience. Trade associations generally act on behalf of their members’ interests, rather than lobbying their own members as the proposal suggests.
The Company may pay membership or other fees to trade organizations from time to time. But the Company’s existing Political Contributions and Expenditures Policy does not permit trade association fees paid by the Company to be used to make political contributions. The Political Contributions and Expenditures Policy also requires that the Company’s management annually report the Company’s memberships and participation in trade organizations to the Company’s Board. The Political Contributions and Expenditures Policy is published on the Company’s website.
The Company believes the report that would be required by Proposal No. 9 would be potentially misleading to the shareholders and the public because it would not necessarily reflect the Company’s views. Disclosure of the Company’s participations in trade associations could also impact the Company’s competitiveness by highlighting the Company’s priorities and strategic interests.
The Company also obtains ratings for its products and joins product registries when it determines these actions are in the Company’s best interests. The Company constantly reviews and assesses ratings organizations and their processes to ensure that they are aligned with the Company’s standards and business interests.
The Board believes the Company’s current disclosure policies and other internal policies are sufficient to manage the issues outlined in the proposal. The Board also believes that producing the report requested by Proposal No. 9 would not be an effective way to protect shareholder value.
For all of the reasons above, the Board recommends a vote against Proposal No. 9.
Approval of Proposal No. 9 requires the affirmative vote of (i) a majority of the shares present or represented by proxy and voting at the Annual Meeting and (ii) a majority of the shares required to constitute the quorum.
Recommendation of the Board
The Board recommends a vote AGAINST Proposal No. 9.
My name is Justin Danhof, and I am representing the National Center for Public Policy Research, the proponent of Proposal Number Nine.
Our Proposal highlights an area of concern to all shareholders: Company affiliations that may primarily advance social or environmental causes rather than promoting shareholder value.
We are asking the Company to be transparent about its membership in, and payments to, trade groups and outside organizations that are actively promoting top-down environmentalism rather than working to advance shareholder value.
The Proposal is necessary because Apple is a member of the Retail Industry Leaders Association (RILA) – one of the country’s largest Washington, D.C-based trade associations. RILA has been working with its member companies to advance top- down, market-distorting sustainability initiatives. RILA is pressuring its members to make expensive capital expenditures that have limited prospects for a reasonable return. RILA also advocates that its members lobby for changes to local building codes that will increase building costs and restrict property rights.
RILA claims that this strategy will give its member companies a competitive advantage when bureaucrats in Washington, D.C issue new environmental regulations. But why is an increasing regulatory state the only future RILA sees? Shouldn’t the Company’s trade associations be working to prevent costly federal interference with Apple’s operations rather than pro-actively acceding to DC’s regulatory morass?
Apple’s 2013 hiring of President Obama’s former head of the Environmental Protection Agency administrator Lisa Jackson is evidence that perhaps the Company agrees with RILA’s sustainability push. Under Jackson’s direction, the EPA issued 1,824 regulations – 20 of which are major regulations estimated to cost corporate America “$7 billion in one-time initial compliance and $44.86 billion in annual direct compliance costs.”
Also, under her leadership, the EPA issued its endangerment finding that dubbed carbon dioxide as a pollutant that is now driving much of the corporate climate change hysteria.
As shareholders, we object to increased government control over Company products and operations, and likewise mandatory environmental standards. This is something the Company should be actively fighting, not preparing surrender.
Apple should feel free to invest in sustainability where it is doing so with a business rationale – and staying one step ahead of federal regulators falls far short of this duty.
We urge shareholders to vote for Proposal Number Nine.
NCCR’s press release:
Tim Cook to Apple Investors: Drop Dead
Apple CEO Tim Cook tells Investors Who Care More About Return on Investment than Climate Change: Your Money is No Longer Welcome
As Board Member Al Gore Cheers the Tech Giant’s Dedication to Environmental Activism, Investors Left to Wonder Just How Much Shareholder Value is Being Destroyed in Efforts to Combat “Climate Change”
Free-Market Activist Presents Shareholder Resolution to Computer Giant Apple Calling for Consumer Transparency on Environmental Issues; Company Balks
Cupertino, CA / Washington, D.C. – At today’s annual meeting of Apple shareholders in Cupertino, California, Apple CEO Tim Cook informed investors that are primarily concerned with making reasonable economic returns that their money is no longer welcome.
The message came in response to the National Center for Public Policy Research’s shareholder resolution asking the tech giant to be transparent about its environmental activism and a question from the National Center about the company’s environmental initiatives.
“Mr. Cook made it very clear to me that if I, or any other investor, was more concerned with return on investment than reducing carbon dioxide emissions, my investment is no longer welcome at Apple,” said Justin Danhof, Esq., director of the National Center’s Free Enterprise Project.
Danhof also asked Apple CEO Tim Cook about the company’s green energy pursuits. Danhof asked whether the company’s environmental investments increased or decreased the company’s bottom line. After initially suggesting that the investments make economic sense, Cook said the company would pursue environmental goals even if there was no economic point at all to the venture. Danhof further asked if the company’s projects would continue to make sense if the federal government stopped heavily subsidizing alternative energy. Cook completely ignored the inquiry and became visibly agitated.
Danhof went on to ask if Cook was willing to amend Apple’s corporate documents to indicate that the company would not pursue environmental initiatives that have some sort of reasonable return on investment – similar to the concession the National Center recently received from General Electric. This question was greeted by boos and hisses from the Al gore contingency in the room.
“Here’s the bottom line: Apple is as obsessed with the theory of so-called climate change as its board member Al Gore is,” said Danhof. “The company’s CEO fervently wants investors who care more about return on investments than reducing CO2 emissions to no longer invest in Apple. Maybe they should take him up on that advice.”
“Although the National Center’s proposal did not receive the required votes to pass, millions of Apple shareholders now know that the company is involved with organizations that don’t appear to have the best interest of Apple’s investors in mind,” said Danhof. “Too often investors look at short-term returns and are unaware of corporate policy decisions that may affect long-term financial prospects. After today’s meeting, investors can be certain that Apple is wasting untold amounts of shareholder money to combat so-called climate change. The only remaining question is: how much?”
The National Center’s shareholder resolution noted that “[s]ome trade associations and business organizations have expanded beyond the promotion of traditional business goals and are lobbying business executives to pursue objectives with primarily social benefits. This may affect Company profitability and shareholder value. The Company’s involvement and acquiescence in these endeavors lacks transparency, and publicly-available information about the Company’s trade association memberships and related activities is minimal. An annual report to shareholders will help protect shareholder value.”
Apple’s full 2014 proxy statement is available here. The National Center’s proposal, “Report on Company Membership and Involvement with Certain Trade Associations and Business Organizations,” appears on page 60.
The National Center filed the resolution, in part, because of Apple’s membership in the Retail Industry Leaders Association (RILA), one of the country’s largest trade associations. In its 2013 “Retail Sustainability Report,” RILA states: “Companies will often develop individual or industry voluntary programs to reduce the need for government regulations. If a retail company minimizes its waste generation, energy and fuel usage, land-use footprint, and other environmental impacts, and strives to improve the labor conditions of the workers across its product supply chains, it will have a competitive advantage when regulations are developed.”
“This shows that rather than fighting increased government regulation, RILA is cooperating with Washington, D.C.’s stranglehold on American business in a misguided effort to stop so-called climate change,” said Danhof. “That is not an appropriate role for a trade association.”
For even more information on RILA, read “The Retail Industry Leaders Association (RILA): A Cartel that Threatens Innovation and Competitiveness,” by National Center Senior Fellow Dr. Bonner Cohen.
“Rather than opting for transparency, Apple opposed the National Center’s resolution,” noted Danhof. “Apple’s actions, from hiring of President Obama’s former head of the Environmental Protection Agency Lisa Jackson, to its investments in supposedly 100 percent renewable data centers, to Cook’s antics at today’s meeting, appear to be geared more towards combating so-called climate change rather than developing new and innovative phones and computers.”
After Danhof presented the proposal, a representative of CalPERS rose to object and stated that climate change should be one of corporate America’s primary concerns, and after she called carbon dioxide emissions a “mortal danger,” Apple board member and former vice president Al Gore turned around and loudly clapped and cheered.
“If Apple wants to follow Al Gore and his chimera of climate change, it does so at its own peril,” said Danhof. “Sustainability and the free market can work in concert, but not if Al Gore is directing corporate behavior.”
“Tim Cook, like every other American, is entitled to his own political views and to be an activist of any legal sort he likes on his own time,” said Amy Ridenour, chairman of the National Center for Public Policy Research. “And if Tim Cook, private citizen, does not care that over 95 percent of all climate models have over-forecast the extent of predicted global warming, and wishes to use those faulty models to lobby for government policies that raise prices, kill jobs and retard economic growth and extended lifespans in the Third World, he has a right to lobby as he likes. But as the CEO of a publicly-held corporation, Tim Cook has a responsibility to, consistent with the law, to make money for his investors. If he’d rather be CEO of the Sierra Club or Greenpeace, he should apply.”
“As in the past, Cook took but a handful of questions from the many shareholders present who were eager to ask a question at the one meeting a year in which shareholder questions are taken,” added Ridenour, “leaving many disappointed. Environmentalism may be a byword at Apple, but transparency surely is not.”
The National Center’s Free Enterprise Project is a leading free-market corporate activist group. In 2013, Free Enterprise Project representatives attended 33 shareholder meetings advancing free-market ideals in the areas of health care, energy, taxes, subsidies, regulations, religious freedom, media bias, gun rights and many more important public policy issues. Today’s Apple meeting was the National Center’s third attendance at a shareholder meeting so far in 2014.
The National Center for Public Policy Research is an Apple shareholder, as are National Center executives.
The National Center for Public Policy Research, founded in 1982, is a non-partisan, free-market, independent conservative think-tank. Ninety-four percent of its support comes from individuals, less than four percent from foundations, and less than two percent from corporations. It receives over 350,000 individual contributions a year from over 96,000 active recent contributors.
Contributions are tax-deductible and greatly appreciated.