
Tim Cook Rejects Politics of the NCPPR - sarreph
http://www.macobserver.com/tmo/article/tim-cook-soundly-rejects-politics-of-the-ncppr-suggests-group-sell-apples-s
======
mikestew
"<Tim Cook> said that there are many things Apple does because they are right
and just, and that a return on investment (ROI) was not the primary
consideration on such issues"

The next time someone trots out the tired old "companies are _legally_
obligated to maximize profits/shareholder value" to explain away crappy
corporate behavior, I'm linking to this.

And kudos to Cook for telling NCPPR to take a figurative hike.

~~~
selmnoo
Yeah because that's just what we need, another asinine interpretation of an
event in which the CEO was basically hand-tied to do one thing: not fuck up
PR. And let's just ignore the legal precedents where companies were sued for
their philanthropic work, and indeed lost. (see the many court cases in which
courts end up ruling that companies are not allowed to engage in purely
philanthropic duties when there is a rigid fiduciary responsibility to
maximize profits; see eBay vs. Craigslist).

And anyway, actions speak louder than words. What I know of Apple is that it
had a CEO who orchestrated keeping wages down for engineers, orchestrated
price fixing of ebooks, kept taking credit for other people's work, frequently
partook in borderline psychopathic behavior (woz: "I begged Steve that we
donate the first Apple I to a woman who took computers into elementary schools
but he made my buy it and donate it myself."), etc. etc. If Tim Cook actually
goes on to commit some serious dollar on philanthropic activities, I would
change my mind about Apple, until then, it's clear that it's all a bullshit PR
dance.

~~~
IBM
Good news, he has!

[http://arstechnica.com/apple/2011/09/the-post-jobs-era-
tim-c...](http://arstechnica.com/apple/2011/09/the-post-jobs-era-tim-cook-
brings-philanthropy-back-to-apple/)

[http://news.cnet.com/8301-13579_3-57370922-37/apple-ceo-
tim-...](http://news.cnet.com/8301-13579_3-57370922-37/apple-ceo-tim-cook-
donates-$100-million-to-charity/)

~~~
selmnoo
Cool, good to hear, I didn't know about this. It seems to be a small step, but
at least it's a step in the right direction. I hope Apple makes it a point to
advertise everywhere that they're doing this (so that other companies can
follow). I think America would do well to have a policy compelling publicly
owned companies to have social goals (apart from the profit-maximizing ones).

~~~
Anechoic
_I hope Apple makes it a point to advertise everywhere that they 're doing
this_

In which case they are going to be accused of doing a "bullshit PR dance."
Damned if you do...

~~~
noonespecial
If they are _actually doing_ the advertised good deeds, it will just be a PR
dance, minus the bullshit. One smells a whole lot better.

------
rjknight
I understand and agree with the idea that companies should maximise
shareholder value, but I've never understood the argument that shareholder
value is exclusively determined by profit. As I see it, the stock market
consists of various firms saying "buy our stock, and we will try to achieve
_X_ with your investment", where X _might_ be maximum ROI, but I don't
understand why it has to be. If I want to found a company which has some goals
other than making a profit, and _so long as I am explicit about this_ then
nobody is being cheated or defrauded, the investors are getting exactly what
they signed up for.

If Tim Cook widely announces what Apple's future philanthropic principles will
be, he's giving everyone a chance to decide if they want to own stock in a
company which follows those principles. The market will judge that via sales
and purchases of Apple stock. What could possibly be more free-market than
that?

~~~
chalst
The fiduciary duty of the directors of a company entails that they make no
decisions that prejudice the general shareholders of a company. The classic
case is making an issue of equity that benefits only a limited group who can
buy it at the expense of diluting the value of the equity of other
shareholders.

The idea that (i) the entire value of a company is the NPV of future profits
to the shareholders, and that (ii) this fiduciary duty is very broad and bears
on all decisions made by the directors, so that any decision that might reduce
return is prejudicial to the interest of shareholders, does pretty much entail
what the NCPPR claim. And there have been efforts in places to expand
fiduciary duty in some jurisdictions to this strong requirement. But I have
the impression that lawyers generally think the idea is daft and undermines
good corporate governance.

IIRC, Steve Milloy of Junk Science operates a crank activist hedge fund that
attempts to undermine environmental innitiatives in the kind of way described
in the article. I believe they have produced dismal returns for their
investors, which suggests that they do not eat their own dog food.

~~~
jvvlimme
It's actually a myth that a company has to maximize shareholdervalue. There is
no corporate law even remotely suggesting it and it is generally a horrible
idea.

[http://www.washingtonpost.com/opinions/harold-meyerson-
the-m...](http://www.washingtonpost.com/opinions/harold-meyerson-the-myth-of-
maximizing-shareholder-
value/2014/02/11/00cdfb14-9336-11e3-84e1-27626c5ef5fb_story.html)

~~~
MWil
I'm sorry but that article neglects any mention of court opinions (many of
which I have read, as has any law student) which interpret the law and say
otherwise.

~~~
jvvlimme
Lynn Stout, a Cornell Corporate Law Professor, seems to disagree with you:
[http://www.amazon.com/Shareholder-Value-Myth-Shareholders-
Co...](http://www.amazon.com/Shareholder-Value-Myth-Shareholders-
Corporations/dp/1459638697/ref=sr_1_4?s=books&ie=UTF8&qid=1393680047&sr=1-4)

~~~
bmelton
Having never heard of Lynn Stout, her claim to fame on Wikipedia is that
Supreme Court Justice John Paul Stevens cited her work in Citizens United v
Federal Exchange Commission... in the dissent.

I could believe that oxygen doesn't exist, and I could probably find somebody
else to agree with that, perhaps even an author or something, but if there
exists a body of law that is on the books and that will punish you for
violating it, the idea of shareholder primacy is very much not a myth.

Dodge v. Ford 1953: > The Court held that a business corporation is organized
primarily for the profit > of the stockholders, as opposed to the community or
its employees. The discretion > of the directors is to be exercised in the
choice of means to attain that end, and > does not extend to the reduction of
profits or the nondistribution of profits among > stockholders in order to
benefit the public, making the profits of the stockholders > incidental
thereto.

This all extends on precedent set way back in 1896 (though there may be
earlier) in Steinway v Steinway & Sons, though in the case of Steinway, the
philanthropic behavior was excused as having had pecuniary value. It's been
cited since, and punishments are being levied in spite of the myth. While it
may be true that there is no law codified to speak expressly on the duties of
shareholder primacy, stare decisis specifically disagrees with that, and
that's really all that matters.

In the real world, of course there is no duty to maximize value at all costs,
and the board elects a CEO who will do a good job of balancing short-term
value against long-term value, and while actions such as Cook's are likely
debatable either way, if we took a more extreme example, and Cook were to give
80% of Apple's assets away to charity, he would very certainly be sued, and he
would very certainly lose. If, as in Steinway, the charitable actions could be
argued to lead to longer term profits, the case gets blurrier, but the idea
that shareholder primacy is a myth that does not exist is simply too
unqualified a statement, and too counter to the facts to be regarded with much
weight.

~~~
judk
Saying that "primacy" equals "short term profits" is also too unqualified and
counter to the facts.

~~~
bmelton
Which is why I didn't suggest that it was.

The claim I was responding to was this > "It's actually a myth that a company
has to maximize shareholdervalue."

There's plenty of evidence that, myth or not, the courts certainly think that
it's real, and if the courts think that it is, then it cannot be a myth.

------
ericHosick
It seems to me that Apple is directly investing into its brand name by doing
things like planning on "having 100 percent of its power come from green
sources".

The ROI is, among other things, customer loyalty.

------
DiabloD3
Companies shouldn't always do things for profit, because doing things only for
profit, well, isn't profitable. Good will has a monetary value, and it is
often worth far more than just making money is.

I never said I was eloquent.

~~~
alexeisadeski3
Sounds like you're saying that companies should only do things for profit -
but only if it's _actually_ profitable :)

~~~
bruce511
I think he's suggesting that there are two kinds of profit. The short-term,
next-quarter-results kind which fuel wall street, and the longer play when
money is invested now and achieves a payback later.

Unfortunate when the word "profit" appears in text, it is often unclear which
one is being referred to.

The easiest way to maximize short-term profit is to simply fire all r&d staff.
Reduce expendses, sell exiting products and profits for that quarter will go
up by plenty. That'll work for 2 quarters, maybe even a year, before the whole
thing implodes.

Obviously we don't do that - we forgoe some of the immediate profit to gain
profit in the future. But there's no guarantee that what r&d are working on
will ever pay off. There's risk involved.

There are also solid reasons for doing one product, which will never make
profit, in order to complement another product which will. That complement
might be direct, or indirect.

Taking Tim's example of making sure apple devices can be used by blind people,
that may indeed be profitable if one considers both the blind people who buy
your product, and also the people who _know_ blind people who made their
decision based on your blind-friendliness. This is of course impossible to
measure.

And therein lies the root problem when it comes to "only doing things to
maximize profits". It's mpossible to measure the actual profitability, over
both short and long term profits, of pretty much anything we do. There are
slimply too many unknowns.

Had Tim answered the question another way, would that impact profitability? If
the question had not been asked, would that improve profitability? Given that
the question was asked, and answered the way it was, does Apple gain some
goodwill? Does that mean that by soundly rejecting the question it
accomplished what the question asked for?

Profit is impossible to optimize for. To make profit you encounter risk. And
by definition some risky actions will ultimately be unprofitable. Thus the
line about companies responsibility being just to make profits, and the
promise the Question asked for, is not meaningful in any practical way.

~~~
djur
John Kenneth Galbraith wrote with a great deal of detail and eloquence about
what kind of conditions might inspire corporations not to maximize profit, and
how those kinds of decisions actually contribute to the perpetuation and
success of said corporations. The main book to read is The New Industrial
State. He wrote it in the '60s when conditions were very different, but the
fundamental principles remain valid.

------
sheetjs
> "If you want me to do things only for ROI reasons, you should get out of
> this stock."

While I agree with his sentiment, I wish he took a moment to explain that
pursuing environmental sustainability may actually help the top line (rather
than insinuating that those goals are net negative to shareholders)

~~~
Zigurd
That's a rathole to avoid if you can. It may sound dismissive, but these guys
are cranks, and their time in the spotlight is rightly to be minimized. 97%+
of shareholders understand that Apple goes the extra mile in sustainability
and agrees with that approach.

~~~
dhoulb
Completely agree. Whether or not worker safety contributes to ROI should never
be a question. Same with environmental impact.

~~~
monkeyspaw
I disagree, mostly because you presented your opinion as black and white.

Apple has, what, > 10k workers? If it cost them $100 billion to prevent one
software worker from getting carpal tunnel, your statement suggests that cost
should be born by Apple. Similarly, if it cost the cumulative GDP of the US to
prevent N amount of pollution, your statement suggests that Apple should go
bankrupt preventing that pollution.

Back in the real world, I suspect we generally agree. The problem, IMO, is
that companies (and consumers) aren't forced to capture the hidden costs of
injuries/pollution.

I just disagree with your black and white assessment. The laws of economics
mean companies have to assign dollar values to human life and safety, as much
as we dislike the feeling it gives us.

~~~
dgreensp
Not all good decisions can be rationalized as having a known, positive ROI. I
think it is a pretty safe statement to say that many big decisions must be
made for other reasons.

~~~
smsm42
When you take the decision, you may not have enough information to know if
it's going to be good or not. But when you took the decision and still
refusing to know how much it costed you and how it influenced company finances
- it's just willful ignorance and unwillingness to face the facts. That is
never good. For the sake of Apple shareholders I hope Cook actually knows the
figures he was asked for, and refusing to publish them just as a PR move, to
gain some fanboy love from bashing an unpopular target. Because if they
genuinely spend money and refuse to count them, it's not good for the company.

------
rdl
All things being equal, I'd like it if Apple provided these numbers to
shareholders/the public.

I support Apple continuing to participate in these programs, but giving
shareholders accurate numbers seems like a worthy goal, and I'd actually like
to know the scale of Apple's investment in green energy as a benchmark for how
far along the green energy industry is coming -- if it's a 100% markup, it's
got a long way to go, but 25-50% wouldn't be too bad.

~~~
honksillet
I agree. Regardless of what one think about the questioner, I would really
like to know the answer to the first question.

------
fdschoeneman
Wait a second. From the lede:

"The self-described conservative think tank was pushing a shareholder proposal
that would have required Apple to disclose the costs of its sustainability
programs and to be more transparent about its participation in "certain trade
associations and business organizations promoting the amorphous concept of
environmental sustainability.""

What is so wrong with that request? Forget your opinions and mine, as well as
of the think tank. Asking Apple to disclose what it is spending, and where, is
a reasonable request. And even if you're a firm believer in the dangers of
anthropogenic global warming, you must understand that not all of the
organizations doing research or providing information about it are entirely
reputable. Information is good. Put it out there. Let stockholders decide.

~~~
sc68cal
Because it's concern trolling - they do not offer these proposals to actually
get the information - they are looking for ammunition to stir the pot.

~~~
fdschoeneman
Like I said, forget their opinions, but also forget their motivations. What is
wrong with the request?

~~~
cpncrunch
There is nothing wrong with the request. However it was soundly rejected by
the shareholders (only 2.95%). That's how corporate democracy works. The
problem is that they kept pushing to get their way even after they had been
voted down by the shareholders.

The more I hear about Tim Cook, the more I admire him. That was a really great
put-down he delivered. There comes a point where you can't reason any further
with unreasonable people and you just have to tell them to fuck off.

~~~
smsm42
The next thing to do after that is to go and publicly complain about how
political discourse has devolved recently.

------
icu
For me this article highlights the tension between long term value creation
and the short term quarterly profit perspective of Wall Street.

I think the creation of value comes before Return on Investment (RoI).
Creating value is much harder than showing a RoI because value is somewhat
intangible and is seen through people's personal values/beliefs. Also it may
take time before the value you have created makes its way to the bottom line.

Arguably Apple's brand, and how stakeholders feel about it, increases Apple's
ROI for its shareholders.

Do Apple's customers care about environmental issues? I'm sure they do. If
Apple ignores this it will eventually hurt Apple's bottom line. Do Apple's
employees care about worker safety? Again, I'm pretty sure they do and I'm
pretty sure that if Apple's management doesn't pay attention it will
eventually hurt the bottom line.

Personally I like the idea of a 'Triple Bottom Line'[1] which acknowledges
that businesses can create negative value to parts of society when maximizing
profit (negative externalities if you are an Economist).

It sounds to me like Tim Cook internalizes this world view and uses it to
steer Apple's corporate decision making. I applaud this and hope that this
inspires other big corporations but also the future entrepreneurs on Hacker
News.

[1][[http://en.wikipedia.org/wiki/Triple_bottom_line](http://en.wikipedia.org/wiki/Triple_bottom_line)]

------
JDulin
The climate change versus shareholder value debate aside, I would be angry
that this representative was obviously trying to hijack the shareholding
meeting discussion to make a political point or have me (Tim Cook) say
something polarizing. They got the latter, but not in the form they hoped for.

------
DanielBMarkham
So let me get this straight:

Conservative group buys stock in Apple. During shareholder meeting asks CEO to
report detailed and accurate figures regarding sustainability costs.

CEO goes off on a bit of a restrained tear, telling the group if they don't
like Apple's sustainability policies they should get out of the stock.

So, since Apple fans have long been the left-leaning, creative, wine and
croissant crowd, was this a paid publicity stunt? Or just simple happenstance?
This kind of story is like giving away free candy. People can argue the
politics of it, people can talk about the role of profit in corporate
governance, people can argue about climate science. Coverage of the story just
goes on and on.

Seriously, you couldn't ask for a better PR platform. I'm pretty damn close to
calling bullshit on this entire story.

~~~
ceejayoz
It's pretty unlikely that the NCPPR would be willing to help Apple with a pro-
environmental PR stunt.

[http://en.wikipedia.org/wiki/National_Center_for_Public_Poli...](http://en.wikipedia.org/wiki/National_Center_for_Public_Policy_Research)

------
sramsay
I'm pleased that Tim Cook said this, but Apple has been marketing itself as
the manufacturer of counter-cultural hippy objects for anarchic outside-the-
box geniuses for decades, while at the same time behaving like any other RoI-
driven capitalist enterprise -- worse than most, in my opinion.

I'm not even convinced that this wasn't, despite appearances, a prepared
statement designed to re-assure stockholders.

~~~
mitchty
Could we once, not have to play favorite sports team with companies and enjoy
a CEO talking down a shareholder that is trying to play politics? Of course
not, now we need to play into conspiracy theories that this whole thing was a
prepared statement by Apple.

No, I guess we can't not be us vs them on things as tech people. Always have
to play teams at all times. After all EVERYONE hates the Yankees cause they
are successful. This crap crops up on every story not about actual technical
things (even then) be it Google, Microsoft, or Apple, or whatever.

Gets draining to be honest, I use a combination of the above's products.
People seem to want to follow some type of religious zeal to this crap.

Some days I want to just go move to a remote greek mountain and cut out my
vocal cords and ears so I don't have to endure constant bickering about this
junk.

/rant/squirrel mode banter off I'm going to bed.

------
Tycho
I would like to know actually how much of Apple's sustainability projects
involves government subsidies. Oh well.

------
paul_f
"The representative asked Mr. Cook if that was the case only because of
government subsidies on green energy.

Mr. Cook didn't directly answer that question"

It's a shareholder meeting. Answer the question. Unless the answer is
embarrassing, which, without more data, we have to assume it is.

~~~
gress
Assuming it is embarrassing is a baseless attack on Tim Cook. We could equally
assume that it was an irrelevant line of discussion that would allow
extremists to distract the meeting from important business. This was a
shareholder meeting, not a trial.

------
Steko
Came for the comic sans, stayed for the delicious irony of a think tank run on
outside donations complaining to the most profitable company in the world that
they aren't focused enough on ROI.

~~~
spacehome
The think tank is pushing _somebody 's_ agenda, and even though the think tank
as an organization isn't profiting, I'm sure the officers are doing quite well
for themselves.

~~~
nikster
Isn't a think tank basically the same as lobbyists, e.g. legalized corruption?
Think tanks push an agenda, which creates laws beneficial to the business
interests of the think tank's backers, which creates $Bns in profits.

In that view, think tanks are probably the most profitable business there is.
Certainly the highest ROI when it works out. Politics can be bought for
hundreds of thousands, but bring in billions.

~~~
briandh
No. In the US, many (most?) think tanks are 501(c)(3) nonprofits -- NCPPR
included -- and cannot make lobbying a primary activity [1]

More broadly, think tanks are groups of like-minded people expressing their
opinions, typically about how governments should be run. The fact that they
accept donations in order to be able to work full time on the cause and to
extend the reach of their advocacy, and that many of those donations come from
individuals or organizations who stand to benefit if some of the think tank's
desired policies are implemented, does not make them "legalized corruption".

[1] [http://www.irs.gov/Charities-%26-Non-
Profits/Lobbying](http://www.irs.gov/Charities-%26-Non-Profits/Lobbying)

~~~
MaysonL
They can't lobby per se, but propaganda is what they do for a living.

------
walshemj
Go Tim - Its true what they say about the quiet Englishman OK IDS is the
exception.

What should have really happened is that another voter at the meeting should
have called move next business and have the motion dumped.

Moving next business is a very brutal way of a meeting telling some one with a
not wanted motion to FO - defiantly would send the right message.

------
discreteevent
Tim Cook shrugged.

------
bluthru
Also, it's not like Apple's out there on their own investing in renewable
energy. Intel, Google, and other tech companies are quite mindful of their
environmental impact.

------
zacinbusiness
I think it would be awesome if Apple could somehow go "unpublic." Is there a
word for that? Buy back all of their stock and dissolve it. A powerhouse of
design and engineering like Apple would be a real force if it didn't have to
blow their asshole investors each quarter or risk some kind of coup.

~~~
repsilat
A company can't buy itself, at least in cash. The cash reserves of a company
are (or should be) worth less than the company itself.

The company obviously can't raise capital to buy itself by issuing shares, so
it would have to get the money loaned to it. At this point I think it needs to
convince its creditor that its stock is undervalued, and at that point the
creditor is better off just buying the undervalued shares themselves. If they
bought enough then they could take the company private if they wanted.

Now, maybe if someone who owned a company outright decided to donate all of
their shares to the company, then it could "own itself". I don't know how that
might work legally, though.

~~~
zacinbusiness
Could a company create a second business (I'd go with Apple ][) and then have
the second company just buy the original company for like a dollar? I'm
assuming there are legal reasons why that can't happen.

~~~
valleyer
Like… the shareholders would not agree to that?

------
doktrin
Good for Tim Cook. This was an appropriate response.

------
coldcode
What rock do these people crawl out from at night?

~~~
vacri
Lignite, most likely.

------
smsm42
I think Tim Cook is ready for a run for Congress. It's classic politician -
"we're doing the right thing, and we're not going to disclose to you how much
it costs you to do it, because it's the right thing, and if you don't like
this just STFU and GTFO". Indeed, what the gall has the shareholder to ask the
executive how much the policy costs him! One should soundly reject this novel
and outrageous concept of executives reporting to shareholders the actual
results of their pet policies. The less shareholders know, the better.
Especially when it comes to the question if the decisions taken by the
management rely on public subsidies - shareholders don't need to know if their
wellbeing depends on taxpayer-funded handouts, that would only disturb them.
Just trust the Supreme Leader, he's doing the right thing.

