Fortune Magazine has named Apple CEO Steve Jobs as “CEO of the Decade”. There is no denying the fact that Apple has delivered for shareholders over the past decade. As the Fortune article states, Apple’s market capitalization has risen from $5 billion in 2000 to approximately $170 billion today. This has been due to Jobs’ ability to create a culture of innovation at Apple that has resulted in groundbreaking new technologies such as the iPod and iPhone not to mention the company’s widely acclaimed personal computers.
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It is easy to forget the dire straits facing Apple when Mr. Jobs returned to the CEO position in 2000. As the Fortune article describes, the company was failing to perform financially and was frequently the target of takeover speculation. Then, in a very short period of time, Mr. Jobs changed the situation with a series of product introductions including a new operating system for the Mac, the first generation iPod, and perhaps most importantly, the iTunes music concept.
Mr. Jobs also succeeded in building significant intangible value for Apple by making it “cool” again. Much of this was due to Mr. Jobs himself and the image he projected at product launches. This intangible brand equity combined with quality product introductions to deliver real value to Apple shareholders.
The most dramatic business success stories are associated with leaders who not only overcame business challenges but also dealt with personal obstacles. Mr. Jobs has had a series of health problems that only make his achievements from a business perspective more impressive. He has also used his experiences to provide leadership to young people as one can see from the impressive Stanford University commencement address shown below. Click on this link for the text of the address or view the video shown below.
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The main objection to Mr. Jobs’ leadership of Apple has been regarding the question of corporate governance. Mr. Jobs failed to notify shareholders regarding his health problems both during his cancer surgery in 2004 and his liver transplant earlier this year.
To what extent is this a valid shareholder complaint?
Mr. Jobs is widely seen to be irreplaceable at Apple. Larry Ellison had the following to say when Fortune asked him about succession at Apple:
Larry Ellison, a CEO known to dislike the topic of succession, says of his friend, “He’s irreplaceable. He’s built a fabulous brand. He’s got a wealth of products. Whenever he leaves, I hope he retires in good health and he’s sailing off in his yacht in the Mediterranean. But they’re going to miss him terribly, because it’s a consumer products company. The product cycle is so fast.”
The question is whether the right to privacy must take a back seat to the right of shareholders to be kept informed regarding the health of a CEO who has driven such a significant amount of shareholder value creation in recent years. From Warren Buffett’s perspective, Mr. Jobs should have revealed more information regarding his health to shareholders:
“Certainly Steve Jobs is important to Apple. So it’s a material fact. Whether he is facing serious surgery or not is a material fact. Whether I’m facing serious surgery is a material fact. Whether [General Electric CEO] Jeff Immelt is, I mean, so I think that’s important.”
Mr. Jobs has created a tremendous amount of value for Apple shareholders and is obviously a genius when it comes to technology and business, but from a corporate governance perspective, the lack of disclosure regarding his health issues has been a cause of legitimate concern. This was the case in 2004 and apparently not much changed since the same pattern emerged again in 2009.
Whether Mr. Jobs deserves Fortune’s designation as “CEO of the Decade” primarily depends on whether one believes that his business accomplishments outweigh the corporate governance lapses that have been allowed to persist at Apple.
Vote on whether you believe Steve Jobs deserves to be “CEO of the Decade”:
Disclosure: No position in Apple.