Activists Take Aim at Apple

At its annual shareholder meeting Thursday, Apple (AAPL) will square off against disaffected shareholders clamoring for a voice in setting executive compensation -- and hoping to prevent another options-backdating scandal.

Three labor unions holding Apple stock in pension funds have put proposals on the company's ballot that would require options to be priced on the day they are granted; give shareholders a nonbinding vote on executive compensation; and tie executive bonuses to the company's stock performance.

In order to pass, each proposal must be voted on by a majority of shareholders and receive 50% of those votes. The AFL-CIO, International Teamsters and Amalgamated Bank LongView Funds submitted the proposals.

Ironically, the assault on Apple's governance practices comes when shareholders are enjoying all-time highs, sparked by continued strong sales of the iPod digital music player, expanded market share of the Mac computer line, and the anxious anticipation of the iPhone. Apple shares closed Wednesday at $106.88.

Apple is one of many companies facing a flurry of proposals this year to improve governance standards and make executives and board members more accountable for corporate performance and compensation.

As of March 30, there were 127 proposals to revamp executive compensation policies, including 40 to link pay to performance, 45 to give shareholders an "advisory vote" on compensation and six to reform option-grant practices, according to advisory firm Institutional Shareholder Services.

Activist shareholders enjoyed a milestone victory in March when a majority of Hewlett-Packard (HPQ) investors voted for a proposal to create a tighter link between performance and the compensation of its popular chief executive, Mark Hurd.