One is the loneliest number. Apple shareholders have certainly realized that Steve Jobs is a lonely man at the top of the company as the stock price dropped about 6.5 percent in price, losing around twenty billion in market cap, on January 18th. The price drop was in response to a note to his employees on January 17th where Jobs explained that he was taking a medical leave of absence and asked that everyone respect his privacy.

Steve Jobs

I can certainly understand the CEO’s request for privacy, as no one (except for perhaps Kathy Griffin) enjoys being hounded by the press even in good health. However, I can also understand the frustration of an investor who bought stock on the Friday before the announcement just to see his investment lose significant value in a matter of days. In fact, his leave prompted this post analyzing whether current stockholders should sell their shares. Because of this, investors and the business community have been arguing that they have a right to know more information about Jobs’ health. The argument is that under the securities laws, public companies have to disclose material information. It appears that the company would only have a duty to disclose health issues if it had made an affirmative statement regarding the CEO’s health that had since become misleading.

A different group of investors has decided to address the problem with a shareholder vote. Institutional Shareholder Services (ISS) has announced that they are going to support a shareholder vote to require Apple to disclose a succession plan. This plan should disclose what Apple intends to do after Jobs eventually leaves. In response to protests from Apple, ISS further explained that the specific people did not have to be named — just the existence of a policy.

Many shareholder proposals are non-binding, and if this one is as well, then Apple could choose to ignore even an overwhelming vote for this proposal. Even if this proposal is binding upon Apple, the most recent comments from ISS suggest that compliance could be achieved by saying “We have a policy in place.” I have a feeling that this would not ease the worries of the investment community.

In my opinion, an investor should factor in the inevitable risks (including the health of the CEO) when investing in a company like Apple, with so much of the company’s future arguably riding on the vision of one man.

What will Apple do? Maybe, Steve Jobs will create a brand new market for a product that we didn’t know we had to have, as he has done so often in the past. Will cryogenic freezing be the solution? Investors can only hope.

Josh Lee

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