Apple’s (AAPL) B.O.D. Under the Spotlight

Apple, Inc. (AAPL) is holding its annual shareholder meeting in Cupertino, CA today. This is the first time for shareholders to directly question the board on whether they appropriately disclosed information relating to CEO Steve Jobs’ health. As everyone is well aware, Steve Jobs is one of the CEO’s most closely identified with his company, he is the leader of the “cult of Apple.” His vision and leadership have been instrumental in the shaping of blockbuster products like the iPod, iPhone, and Mac computers.

AAPLThe gray area is what sort of explanation is due to shareholders in such a unique situation? Since the first time rumors began making their way around the web after Jobs looked gaunt at an iPod release in San Francisco, the stock has fallen 43%. Shareholders understandably are angry over their losses, especially if they could have been mitigated. Amazingly, sales of Apple products had held up remarkably well, although there are signs that that resistance to a slowdown in spending could be showing cracks. Apple has not released a major product in the better part of the year, and computer sales have fallen off quite a bit recently as well. Clearly, not all of the stock’s decline can be blamed on Jobs health as Squawk Box discussed this morning:

“Where does this company go when we’re in a recession? Shipping data from China, one of the worst categories MP3 players, how long can Apple buck that? You know, Apple’s been really more about product cycles…Now, in areas where there hasn’t been a refresh like the iMac, that was actually down 25%. So yes, you know, the economy’s putting a damper on things, but Apple’s been really more about product cycles driving growth.”

We will continue to update this post as more news breaks from the shareholder’s meeting. What we do know is that Jobs will not be in attendance. What is unknown is the amount of responsibility the board will take on for not disclosing the risks to shareholders of Jobs’ health. We would expect the board will stick with their strategy of saying that Mr. Jobs health is a private matter, and given the uniqueness of the situation what precedent do shareholders have to back them up?

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