By Dan McCrum in New York
Apple is facing fresh shareholder pressure at its annual meeting this month to change the way it elects directors from the largest US public pension fund.
Calpers – the California Public Employees? Retirement System – has called on the largest US company by market capitalisation to allow directors to be elected by majority voting.
At present, Apple shareholders can only withhold their vote on an election of a director, rather than vote against. If a director is unopposed he only requires one vote in favour to retain his post, irrespective of how many votes are withheld.
?Apple needs a governance upgrade,? said Anne Simpson, head of corporate governance for Calpers.
The pension fund last year submitted a proposal that Apple adopt majority voting in its annual elections for board members. That was supported by 73 per cent of shareholders who voted last year.
But the proposal was non-binding and Apple declined to change voting procedures, nullifying what had been seen as a victory for shareholder rights. Calpers targeted the company as the most high-profile part of a campaign by the three largest US pension funds for shareholder democracy.
Apple was among 38 big US companies Calpers lobbied on the issue last year, 36 of whom adopted majority voting. Nearly 80 per cent of S&P 500 groups have adopted the practice, as have more than half of the Russell 1000, according to Calpers.
?It?s a hallmark of accountability,? said Ms Simpson.
Apple has again opposed the motion. ?The unusual mechanics of California law create the risk that directors who enjoy overwhelming shareholder support may fail to be elected because an insufficient number of shareholders voted in the election,? it said in its proxy materials sent to investors.
In a letter to shareholders seeking support for the proposal, Calpers argued that other California-based companies, including Cisco Systems, Edison International and Sempra Energy, have adopted some form of majority voting. ?State law is no barrier to good practice as Apple has claimed,? the letter said. Institutional Shareholder Services has also recommended that investors support the proposal. Calpers, which has about $230bn assets under management, owns 0.26 per cent of Apple.
At the February 23 meeting, Apple faces additional proposals asking for greater disclosure of political donations, and an advisory vote on directors? pay. The National Center for Public Policy Research has also proposed that Apple publish a ?conflict of interest report?.
Apple said that it already had adequate disclosure and corporate governance practices in place, and has recommended that investors vote against all the shareholder proposals.
? The Financial Times Limited 2012