In practical terms, we know that shareholder dissatisfaction with management in a publicly traded company is most often registered through withdrawal, at least where there is a market to sell shares. On a practical level, Cook isn’t suggesting anything unusual when he tells dissenting shareholders to sell their stock if they don’t like what he’s doing, but it was still unwise to have said it. The shareholders do not have a direct right to participate in management decisions, but presumably Cook is still accountable to them through periodic elections/appointments. The “superstar CEO” phenomenon may be providing some of his sense of security, but I suspect that in even some small private companies, the directors or CEOs can come to feel a strong sense of power and ownership of the company as a whole.
At any rate, he probably should have stuck to saying that he doesn’t do things *only* for ROI reasons. Wise tells us that directors can validly consider a multitude of interests in determining the best interests of the company. A pretty strong reason to support Apple’s ethical and sustainable policies is market share – both directly and indirectly. Directly, creating devices that are accessible for the visually impaired directly expands your potential consumer base. Indirectly, there is increasing demand for ethical and sustainable products, so all of these expenses may well translate into a greater profit in absolute terms, even if the profit per unit decreases. And this calculation may not pay off, but it should be subject to the business judgement rule.
That may be the route forward for now, but we must keep looking for a more fulsome basis on which to allow principles to enter corporate law.
Alisa, first off: I appreciate this title.
I feel that when the CEO of a $495 billion empire says they aren’t concerned with return on investment, it’s all bluster and theatrics. If he weren’t interested in ROI, Apple products would not have any markup. His statement was news worthy because – shocks and gasps – he actually cares about blind people/the environment/puppies! This is ground breaking! I must support him! And just like that, Apple makes another billion dollars, of which the shareholder benefits. Maybe Steve Cook was brave for saying it, but I would argue that THAT courage is in the same vein as his courage to sell two dozen dongles for the new MacBook. It’s a calculated business decision, and one that shareholders likely picked up on. (And considering this happened more than 2 years ago, and he hasn’t been voted out, I’m sure they either picked it up, or were happy enough with their bank balance to let it slide)
As long as there are nets around foxcon facilities to ensure suicidal workers don’t actually day, rather than pay them a living wage, I would take any altruistic comments from a superstar-CEO with a heaping spoon of salt.
I agree with Kelly, great title! And good conversation here. At first, I was aligned with Alisa, thinking Cook could have been more diplomatic. Then, I read Kelly’s post and was reminded of theatrics. I guess we have to remember when we see comments such as these, that the intended audience ay not be the one that is actually being spoken to. There are goals that lay behind the curtain of the actual words being spoken. Cook’s comments certainly also made me forget for a tad little bit, which people are producing the product and under which circumstances.
Good point Alisa! I hadn’t considered the fact that the shareholder in question could have simply withdrew and sold his shares in response to what he perceived as “poor management”; management that he thought would decrease shareholder profits at the expense of an environmentally friendly policy. I think that the shareholder in question knows how valuable his Apple shares are because he resorted to calling Cook out on his policies rather than simply withdrawing. Very interesting.
When I read the Apple excerpt for class, I thought of how much the world of business law has changed since Dodge v Ford and the early formulation of the Business Judgment Rule. In Dodge v Ford, a long-range altruistic goal was not seem as a valid objective of the board of directors. Instead, it was struck down and the Ford directors were only to consider the maximization of shareholder profits. Even today the BCBCA s. 30 does not mention “altruism” when it describes the personhood of a corporation. Whereas Cook is seemingly allowed to consider Apple’s long-range objectives in considering the corporation’s best interests. He is permitted to consider the environment as a weighty factor in assessing the best interests of the corporation (as was suggested as a factor to be considered in BCE Inc.). Thus, although altruism was rejected in Dodge v Ford, if the exact same case was litigated before the courts today, it would appear that a Canadian court would be extremely deferential to the business decision, in the absence of wrongdoing or fraud by the corporation.