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CEO Daily Brief – Feb. 24, 2011

CEO Succession Plan Proposal Rejected by Apple Shareholders Apple shareholders have rejected a proposal from unions and their pension funds …

CEO Succession Plan Proposal Rejected by Apple Shareholders

Apple shareholders have rejected a proposal from unions and their pension funds – who own shares of the company – to have a written succession plan in place and released to the public for the company’s CEO. The current CEO Steve Jobs – who is credited with leading the innovative company to new heights – has taken a medical leave for an undisclosed ailment. There is no idea when he will return. Previously, he was treated for cancer.

The unions had hoped to come up with a very public plan for choosing Jobs’ successor. Apple wants the issue of CEO succession to be handled quietly. Day-to-day operations are now being handled by Chief Operating Officer Tim Cook.

The proposal called for the company to come up with a “formal assessment process” to evaluate CEO candidates; start “non-emergency” CEO succession planning three years before the expected departure of a current CEO; and issue an annual report to shareholders on CEO succession.

Apple’s board was opposed to the proposal contending it “attempts to micro-manage and constrain the actions of the board,” according to a report from Forbes. The company also claims it already does such planning outside of the public eye, and said releasing the information to the public could lead to top executives leaving the company if they were not included on short lists for potential CEOs.

The shareholders made the right decisions. A highly public process in the area of CEO succession would stand to put CEOs’ careers in the limelight. If anything, the issue highlights how important it is for CEOs who are on the way out, or those top employees who are vying for the top spot in a company, to be treated with respect by the company and its shareholders.

For more about CEO succession at Apple, as reported by Forbes, please click here.


Alibaba CEO Demonstrates He Is an Honorable Man

Alibaba CEO David Wei did not have to resign from his top position at Alibaba, a Chinese e-commerce site. A scandal, with allegations of fraud, surfaced at the company. He was not linked to the fraud. But he took personal responsibility for what happened. The reputation of the company is very important to its future. Wei understood that.

The issue was that some 2,326 sellers using the siteallegedly defrauded customers. About 100 Alibaba.com employees helped the sellers in their questionable activities though either negligence or intentional actions. Wei and COO Elvis Lee both resigned.

Wei oversaw the company’s successful initial public offering.  He was a right-hand man to the chairman.

The fraud averaged about $1,200 an incident. It isn’t a large sum of money. But the company realizes if it does not have the trust of its customers it has nothing.

In days when corporate scandals often lead to the ouster of those who get caught while others remain in office, it’s refreshing to a successful company leader take personal responsibility for improper events which happened under his watch.

Too often, CEOs manage to have their underlings take the fall when impropriety breaks. Wei’s example is a good one to include in business ethics classes. The instructors of these classes search for examples of appropriate conduct by business leaders.

For more about Alibaba.com, as reported by Fortune, please click here.


Public Unions Rally for Lucrative Benefits

CEOs of businesses may be among the last group that will be swayed by all the rallies now underway by members of government unions who want to keep their lucrative benefits. State governments are overwhelmed by the large deficits caused by runaway spending. New taxes will only hurt the economy, and not lead to the job growth and prosperity desired by most Americans. So government needs to do what the private sector does – look for other ways to cut costs.

That has led to the very public demonstrations in locations such as Wisconsin, which are branching through out the country. Writing in The Huffington Post, Gary Shapiro, president & CEO of the Consumer Electronics Association, remarked, “It seems the growing government-worker demonstrations in state capitols have all the zeal and righteousness of the recent pro-democracy Egypt protests. … But these are hardly pro-democracy protests. In fact, they are anti-democracy protests. Protest leaders are seeking to thwart the will of voters and a public increasingly upset that government workers are taking advantage of their already generous entitlement packages to the disadvantage of taxpayers.”

Both Democratic and Republican governors find that money is not available to pay the salary, benefits and retirement pay and healthcare of government workers.

Shapiro would like to see union leaders and their members identify ways to cut government spending. Government workers know where spending is excessive in government organizations. Unions could also help generate more tax revenue – that would help cover employee costs – by encouraging states to be more business friendly.

What Shapiro shows is that the old way of doing things in unions probably won’t work in this current economy.

For more about public employee unions, as reported by The Huffington Post, please click here.


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