Time to Apologize to Apple's Board

NEW YORK ( TheStreet) -- It's now been a week since Steve Jobs died. Tim Cook is now Apple's ( AAPL) CEO. Since Apple closed on Oct. 5 at $378, the stock is up 7.4% -- which is about 1.5% better than the Nasdaq. The company has announced its 4S version of the iPhone and rolled out its latest iOS 5.

Obviously, we won't know the true long-term ramifications of the loss of Steve Jobs to Apple for a long time -- maybe seven years. However, it's obvious that the company has managed the transition from Jobs to Cook rather successfully.

Shouldn't Apple's board of directors get some credit for this successful transition?

A few months ago, there was a steady drumbeat of criticism directed toward the board from what Conrad Black would probably call the "corporate governance zealots." Readers know that I'm one of the bigger proponents of strong corporate governance. But I must admit, it's been puzzling to me some of the governance criticism directed to Apple in the last year.A few days ago, Reuters ran a story with the headline: "Apple's board needs to step up to new era."Here are some of quotes from several "experts" about how Apple's board needs to be changed in the wake of Jobs' death.
"The old message was 'trust Steve,' the new message has to be 'trust the team.' ... It's no longer the cult of personality." said Jim Post, a professor of corporate governance at Boston University School of Management who called for an independent chairman.

"The board needs to be expanded. They need to bring on additional independent talent ... people who were not living in Steve's shadow," he said.

"Much like Disney, Apple's founder was the brand. He was their Mickey Mouse, he was their Betty Crocker," said corporate governance expert Nell Minow of GovernanceMetrics International. "They have to replace him in five different ways."

"They need somebody who's going to stir the pot," said Jeffrey Sonnenfeld, Professor at the Yale School of Management.

Nell Minow also told Bloomberg last January:
"This board has acted too much over the years as an operating division of the company, not the representatives of the company.... The board has been very weak at this company in regard to compensation and back-dated stock options.... I want the board to say: 'here's what we're going to do in one month or two months about a CEO succession plan.'"

You would almost think that the board is made up of a bunch of sycophants. Is that fair? I don't think so.

The board certainly doesn't jump out at me as being one of the best in America (I'd actually point you to Amazon ( AMZN) to see what I think is a tremendously qualified board). But it certainly isn't the worst -- far from it.

The complaints of stock option back-dating are certainly fair game and deserved to be called out. However, complaining about Apple's compensation -- in the wake of their phenomenal stock performance over the last 15 years -- rings hollow to me.

Who says this board needs to change at all? Maybe it won't. Will shareholders care? Certainly not if they continue on the track their on with the operating results they've had.

Remember all those people last January calling for the board to release a "succession plan" for Steve? These were the same people saying to release Steve's medical records a few years ago. In the end, he (and the board) said no. Were they wrong? Would it have changed any outcome compared to where we are today? I think even the most ardent corporate governance gadfly would have to conclude: no.

In the end, Apple's board did its job. Well-intentioned professors can please form a line to the right to pass along their apologies.

At the time of publication, Eric Jackson was long AAPL.

Eric Jackson is founder and Managing Member of Ironfire Capital and the general partner and investment manager of Ironfire Capital US Fund LP and Ironfire Capital International Fund, Ltd. In January 2007, Jackson started the world's first Internet-based campaign to increase shareholder value at Yahoo!, leading to a change in CEOs in 2007. He also spoke out in favor of Yahoo!'s accepting Microsoft's buyout offer in 2008. Global Proxy Watch named Jackson as one of its 10 "Stars" who positively influenced international corporate governance and shareowner value in 2007.

Prior to founding Ironfire Capital, Jackson was President and CEO of Jackson Leadership Systems, Inc., a leadership, strategy, and governance consulting firm. He completed his Ph.D. in the Management Department at the Columbia University Graduate School of Business in New York, with a specialization in Strategic Management and Corporate Governance, and holds a B.A. from McGill University.

He was previously Vice President of Strategy and Business Development at VoiceGenie Technologies, a software firm now owned by Alcatel-Lucent. In 2004, Jackson founded the Young Patrons' Circle at the Royal Ontario Museum in Toronto, which is now the second-largest social and philanthropic group of its kind in North America, raising $500,000 annually for the museum. You can follow Jackson on Twitter at www.twitter.com/ericjackson or @ericjackson.

You can contact Eric by emailing him at eric.jackson@thestreet.com.

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