Apple chief to face company shareholders

Apple chief executive Tim Cook is in an enviable position — market-leading products, a $98bn (€74bn) warchest and a stock price that seems gravity-defying.

But as he gears up for the annual face-to-face meeting with shareholders, a few issues may be causing him angst. Chief among them are in China, where poor labour conditions are in the spotlight and Apple’s iPad trademark is under attack.

The meeting today comes days after Apple touched a record high of $526.29 before receding slightly.

The stock may get a boost next month, when Apple is expected to unveil a new version of its best-selling iPad.

Apple shares have seen a blistering rally in the past seven weeks, gaining $100 and making it the most valuable US company with $468bn in market capitalisation.

But as much as Apple’s shares rally, working conditions at the company’s manufacturing contractors in China have attracted attention this year.

Recently, Apple has been trying to redirect the spotlight on its efforts to force its partners to treat their employees better and the iPhone and iPad maker may use today’s meeting to repeat its commitment to improve labour conditions in its supply chain.

“The Fair Labor Association and the audit they are doing of all their [supply] firms is a corporate governance issue that will probably be a reasonably active discussion at the shareholder meeting,” said Tim Lesko, portfolio manager at Granite investment advisors. Apple shares account for about 3% of Granite’s equity assets.

The US non-profit labour group Fair Labor Association has begun a study of the working conditions at Apple’s main contract manufacturers, including supplier Foxconn Technology Group’s plants in China, which has been in the news for worker suicides, a plant explosion and poor working conditions.

Another issue that has now started attracting attention from shareholders, is the trademark battle moves in China, where troubled technology firm Proview is seeking to halt the sale of iPads, claiming it owns the iPad trademark in China.

Connor Browne, portfolio manger of Thornburg Value Fund — another Apple investor — wants to see the trademark case settled. “Apple has positioned itself well in China,” he said. “I would hate to slow the momentum there because of court issues.”

A perennial issue that shareholders zoom in on is Apple’s enormous cash pile. The company now boasts of over $100-a-share in cash and securities.

Cook said earlier this month that the company is in very active discussions at the board level about what to do with its cash, asking shareholders to be patient as Apple decides the way forward, stoking speculation that Apple may return some of that money to shareholders through dividends or share buybacks — even if it is only a one-time deal.

Apple’s cash balance is the largest among US technology companies, and many analysts think the company should put at least some of the money to work. The company last bought back shares in 2001, and scrapped its dividend in the mid 1990s.

A dividend could give Apple stock a short-term boost as institutional investors — who typically own only stocks that pay dividends — may buy it.

“It certainly would increase the potential owners for the stock,” Lesko said.

Apple’s annual meeting rarely yields any financial forecasts or product-related news but corporate governance could be part of the discussion.

Apple’s board has long been criticised for its lack of disclosure, particularly about leadership succession while Steve Jobs battled illnesses the details of which were not revealed.