News Article

This article originally appeared in the Atlanta Journal-Constitution’s “Business Voices” section on March 13, 2011.
 

If Paul McCartney died tomorrow, there could never be another Paul McCartney. There certainly has not been another John Lennon or Elvis. Some uniquely-talented people are irreplaceable.
 

And what of superstar CEOs? For example, what if Steve Jobs, now on sick leave, never returns to Apple? The nature of Job's latest illness has not been disclosed, although he battled pancreatic cancer in 2004 and had a liver transplant five years later.

Despite his recent appearance at the unveiling of the iPad 2, no one outside the company's inner circle knows when – or whether – he will take the helm again.
 

A resolution offered at Apple's shareholder meeting in February asked the board to disclose its strategy for replacing Jobs, noting that Hewlett-Packard, Intel and American Express all have succession plans.

“Apple bears a responsibility to be upfront with shareholders about how it would handle a CEO vacancy,” the Wall Street Journal quoted Laborers' International Union spokeswoman Jennifer O'Dell as saying.

Institutional Shareholder Services, an influential proxy advisory firm, backed the proposal. “Such a report would enable shareholders to judge the board on its readiness and willingness to meet the demands of succession planning based on the circumstances at that time,” the group said. Apple investors defeated the proposal.

As a lawyer who advises corporate boards and leaders, I strongly believe in transparency and openness.

Yet, I believe the decision was wise. Releasing specifics about a succession plan could be extremely detrimental.

ISS argued that Apple would not have to release sensitive information such as the names of potential successors. But realistically, no matter who might take over, it would not be Steve Jobs. Since hope has more of an upside than reality, in this case, not releasing a succession plan was the best move.

The concerns, however, are understandable, especially with someone like Jobs. Some consider John Sculley to be one of the worst CEOs in history for essentially firing Jobs from Apple in 1985, then focusing more on marketing products than making great ones. Apple suffered until Jobs' 1997 return, when it roared back to become one of the top companies in technology, consumer goods and entertainment.

Many shareholders are now asking whether Apple is doing the right thing by releasing so little information about his health. The SEC leaves it up to corporate boards to determine what is and is not material to shareholders; some say the SEC should force public companies to release more information when top leaders face life-threatening illnesses.

The SEC, however, should change its rules. Boards should continue to handle CEO health issues as they handle any other disclosure – by looking at whether the information is material, then reaching a judgment about whether or not to disclose the details. CEOs are entitled to their privacy, as is everyone else; they want to control their destinies as long as they can, and their boards want to give them the dignity to do that.

In the legal arena, there is a saying that a hard case makes bad law. In other words, a trial that forces tough decisions sometimes sets a precedent that becomes too extreme in more routine situations. The case of one superstar CEO should not be a game-changer for everyone.

Even if Jobs is irreplaceable as a talent, is he irreplaceable as a CEO? I would say no.

Apple is based in Silicon Valley, which has a deep talent pool. California's lax anti-competitive laws help executives move around at will. Good talent is a phone call – and a large compensation package – away.

In the near-term, Apple appears to have great new products in the pipeline, plus strong cash flow. There may never be another Steve Jobs, but that is not to say his eventual departure would be the end of Apple. It is also not a reason to change a system that is working well for both companies and shareholders as a whole.