The Apple board's succession headache.
Who can follow the most successful "successor" CEO Tim Cook.
Apple CEO Tim Cook marks 12 years on the job today. The silver haired, no-drama, 62 year-old was appointed chief on August 24, 2011. The stock fell that day, and a few months later co-founder Steve Jobs passed away leaving Cook with some huge shoes to fill.
The Economist has credited Cook as the most successful “successor” CEO of all time, giving the Apple board a tough task figuring out the right candidate to continue Cook’s incredible run. Internally, it’s a source of non-stop speculation. There’s a belief that no candidate has yet been selected. Last time around, Apple’s board of directors were criticized for failing to reveal succession plans as Jobs’ health began to fail. The SEC even took a look at the situation.
While the Disney succession plan (or lack of one) is endlessly dissected, barely anything is written about who might succeed Cook when the time comes.
The most logical and obvious two candidates are: chief operating officer Jeff Williams and Deidre O’Brien, who runs the global retail operation, according to one person close to the company. But top of the unofficial, less obvious list is John Ternus, svp hardware engineering, who’s in charge of iPhone hardware along with AirPods, and the Mac and iPad product lines.
Some see Jennifer Bailey, vp of internet services, who runs Apple Pay as a future CEO. (Customers have deposited more than $10 billion in Apple Card’s high yield savings account.) While others have suggested that Craig Ferderighi fits the bill as the svp of software engineering. He’s often on stage doing product demos, and worked with Steve Jobs at NeXT. Apple did not respond for comment. Bloomberg compiled a list in 2021.
Cook does not talk about succession often. In 2017 he said: “I see my role as CEO to prepare as many people as I can to be CEO, and that’s what I’m doing. And then the board makes a decision at that point in time.” In 2021, he told Kara Swisher he “probably” wouldn’t be around in ten years. There have been no indications he’s stepping down and he has equity awards due this year through 2025, according to filings.
Cook watched Disney CEO Bob Iger step down in 2020 and then return, with interest, said one person familiar with conversations at Apple. This person shared that Cook concluded that if Iger could stay in charge then so could he. In 2019, Harvard Business Review reported that the optimum amount of time CEOs should remain on the job is nine and half years. (Warren Buffett, the 92 year-old CEO of Berkshire Hathaway, has been in the role since 1970.)
Over the past 12 years, Cook has served shareholders well. Apple’s market cap has leapt from $377 billion to $2.8 trillion thanks to the launch of a host of new products and services including: the Apple Watch, AirPods, the Apple TV device and streaming service, AppleTV+, Apple Pay and a healthcare business. Apple also shared this month that it has more than a billion subscribers.
Apple directors must be ruminating on where growth will come over the next decade. Apple reported its third quarter of declining sales earlier this month, Bloomberg reported, though the Vision Pro headset and iPhone 15 are on the way in the coming months. The company’s fiscal new year begins in September.
Several media outlets and analysts are speculating about whether Apple could buy Disney, or as Wedbush analyst Dan Ives told CNBC, “it’s a matter of when, not if” Apple buys Disney’s ESPN.
Meanwhile, Hollywood executives are hearing that the actors’ and writers' strikes are shifting Apple’s focus. (Apple had planned to spend $1 billion a year on movies to release in theaters.)
Instead of continuing to spend millions on movies and series from big name creators, Apple is going to spend more of its streaming budget on growing its sports portfolio instead. It’s not hard to see why. The MLS Season Pass on Apple TV has attracted upward of a million subscribers to date, in part thanks to soccer player Lionel Messi. Apple had been involved in discussions for Pac-12 rights as well as for English Premier League soccer, and will almost certainly be at the table for NBA when the exclusive negotiating window opens next year.
Senior vice president, Services Eddy Cue and Oliver Schusser, Apple’s new lead on sports, streaming and music, are the guys in charge of Apple’s entertainment business. It’s worth pondering the succession planning at Apple, as well as at Disney, if the two companies end up forging a future together.
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