January 25, 2006 1:00 PM PST
Jobs' new Disney role raises conflict concerns
(continued from previous page)
marketing work as part of the pact, which HP inherited as part of its Compaq Computer buyout. In 2003, HP
For now, Disney says Jobs may take himself out of the stream of discussion for this kind of sensitive issue.
"If there are occasions when the board deals with company business with Apple, appropriate steps, which may include recusal, will be taken to ensure that conflicts of interest are avoided," said Disney spokesman David Caouette.
An Apple representative had no immediate comment on the issue.
Avoiding a Mickey Mouse approach
Not all corporate governance experts are worried about this dual Jobs role.
Paul Lapides, director of the corporate governance center at Kennesaw State University in suburban Atlanta, said he expects conflicts, but he predicts that Disney and Jobs can manage them. In some cases, that may mean Jobs will have to refrain from voting, while in other instances he may have to recuse himself entirely from particular discussions.
"One of the important things is for the board to address these conflicts head-on and not be Mickey Mouse with the situation," Lapides said.
To some extent, it's an area both companies have practice in addressing, and for which both have come under criticism previously.
Apple, for example, was cited in a 2002 Business Week article as having one of America's worst boards, a rating that included measures such as the presence of an independent auditor or financial ties with outside directors. That is the most recent survey of the issue by the magazine. Disney was on the magazine's list of bad boards several times in the 1990s.
In 2002, Apple shareholders put forth a measure to require that the company's compensation and nominating committees be made up entirely of independent directors. The shareholders also wanted to exclude directors who were significant Apple customers or executives at companies on which Jobs sits as a director. At the time, Apple's board members included Jerome York, then-CEO of large Mac dealer Micro Warehouse and Gap's then-CEO Millard Drexler. Jobs, at the time, was on Gap's board of directors.
He later left Gap's board, and Apple added former Vice President Al Gore as another independent director. York and Drexler remain on Apple's board, but both have new posts, York as a venture capitalist and Drexler as CEO of J. Crew. Apple's former CFO, Fred Anderson, is also on the company's board, along with Jobs and Intuit Chairman Scott Cook and Genentech CEO Arthur Levinson.
After long criticism by shareholders, Disney's board of directors was reformed in 2003, reducing the total number of directors from 17 to 13 and giving outside, or so-called independent, directors more power. Jobs, a new 14th board member, will be counted as a nonindependent, or someone with ties to companies that have financial dealings with Disney, the companies said Tuesday.
That qualification helps, but it doesn't eliminate concerns, Dartmouth's Eckbo said. Eckbo is one of a group of governance experts who have called for stricter rules that guard against conflicts even if there are some costs to the companies. Regardless of how strong they might be, efforts to keep Jobs out of decisions that affect Apple are unlikely to be perfect, he said.
"That comes down to whether (those efforts) are actually feasible," Eckbo said. "The fact that Jobs leaves the room when they talk about Apple doesn't mean that he doesn't have an influence on the outcome of the conversation."
13 commentsJoin the conversation! Add your comment