Apple Inc., after facing criticism that its board is too close-knit, will hold its first shareholder meeting tomorrow with a new co-lead director: Avon Products Inc. Chief Executive Officer Andrea Jung.

Jung, the newest director and only woman serving on the seven-member board, quietly took over as co-lead in December. She succeeds former Apple executive Bill Campbell, one of the company’s longest-serving board members and a mentor to CEO Steve Jobs. Jobs is expected to appear at the meeting.

The handoff to Jung follows complaints by corporate- governance experts that Jobs had too much sway over a group of hand-picked directors. That may have affected the limited disclosures about Jobs’s health last year, when he had a liver transplant, said Jeffrey Sonnenfeld, a dean at Yale University’s School of Management. Jung’s elevation to co-lead director gives a more independent voice to the board, he said.

“This is a really good move and I applaud them,” said Sonnenfeld, who studies corporate-governance issues at the school in New Haven, Connecticut. “I don’t know if this shows contrition, but they are moving forward.”

Jobs, who turns 55 today, has attended every one of Apple’s shareholder meetings since he returned as CEO in 1997 -- except for last year, when he was on medical leave. The company disclosed Jung’s new role by mentioning her new two-word designation on Page 8 in its December proxy statement.

‘Great Addition’

Apple declined to say why Campbell relinquished his role, said Steve Dowling, a spokesman for the Cupertino, California- based company. Jung “is a strong CEO and marketer and her insights and experience have been a great addition to Apple’s board,” Dowling said. He declined to comment on why Apple didn’t announce the change in a press release, referring questions back to the filing.

Jung, 51, declined to be interviewed for this story, said Jennifer Vargas, a spokeswoman for New York-based Avon. Campbell, who remains on the board, had been co-lead director since 2005. He didn’t respond to a request for comment.

Jobs, who co-founded Apple in 1976, was fired by the board in 1985 following a management dispute. When he rejoined Apple almost 13 years ago, one of his first actions was to replace all except two of the directors. His picks included Campbell -- a former Apple sales executive who went on to run Apple’s software subsidiary, Claris Inc. -- and former International Business Machines Corp. Chief Financial Officer Jerry York.

Al Gore

Jobs added former U.S. Vice President Al Gore to the board in 2003, J. Crew Group Inc. CEO Millard “Mickey” Drexler in 1999, Genentech Inc. Chairman Art Levinson in 2000 and Google Inc. CEO Eric Schmidt in 2006.

The board stood behind Jobs in 2006 after the U.S. Securities and Exchange Commission began an investigation into stock-option backdating. Jobs admitted to recommending some favorable dates on options other than his own. A special board committee, led by Gore, exonerated him of any misconduct.

In January 2009, Jobs disclosed that a hormone imbalance was affecting his health and that he would remain CEO while seeking a relatively simple and straightforward treatment. Nine days later, Jobs went on a 5 1/2-month leave of absence, during which time he had the liver transplant.

The SEC started a review of the disclosures to ensure investors weren’t mislead, a person familiar with the matter said at the time. SEC spokesman John Nester declined to comment.

Antitrust Probe

The directors came under scrutiny again later in the year by the Federal Trade Commission, which examined whether overlapping directors between Apple and Google violated antitrust laws. The investigation ended after Schmidt stepped down from Apple’s board and Levinson resigned from Google’s board.

Levinson remains on Apple’s board, where he shares co-lead director duties with Jung. Levinson was named co-lead, along with Campbell, in December 2005, according to a company filing. Campbell also serves as chairman of Intuit Inc.

The board met four times in 2009, Apple said in December. The company says it considers all its directors, except for Jobs, as independent.

That isn’t a view shared by some corporate-governance experts. Campbell worked at Apple as a marketing executive in the 1980s. That makes him an “insider,” said Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware.

Lingering Question

Elson called the switch to Jung a step forward.

“You’re replacing an insider with someone who is an outsider -- that’s a positive,” Elson said. “But it doesn’t answer the fundamental question as to why you have co-leads and not a nonexecutive chairman. Why not create a nonexecutive chair, as many companies have done, particularly given the controversy that surrounded Apple and its board and questions about the CEO’s control over them?”

The difference is that chairman is a title with legal meaning, while a lead director is an “unofficial position with no legal responsibilities,” Elson said.

Apple fell $3.36 to $197.06 yesterday in Nasdaq Stock Market trading. The shares more than doubled in value last year.

Investors say they welcome Jung’s new role on the board.

“It makes a difference,” said Michael Obuchowski, chief investment officer for First Empire Asset Management Inc. The Hauppauge, New York, firm oversees about $3.6 billion, including Apple shares. “I like seeing directors -- especially lead and those chairing different committees -- as independent as possible, especially with CEOs who have a strong personality and a forceful style of management.”

Retail Background

With Jung, who joined the board in January 2008, Apple gets a marketing whiz with more than two decades of direct-sales and merchandising experience.

She was born in Toronto to Chinese immigrants and speaks fluent Mandarin. After graduating magna cum laude in English literature from Princeton University, her first job in retail was in the management training program at Bloomingdale’s. Jung went to work for Avon in 1994 after stints at Neiman Marcus and I. Magnin & Co.

In 1999, she took over as CEO of Avon, the world’s largest door-to-door cosmetics seller. Sales at Avon have almost doubled to $10.4 billion under her leadership. She also serves on the board of General Electric Co.

“She’s been an outstanding leader and almost an icon in her ability to connect with the direct-sales representatives who make up the heart, soul and backbone of Avon,” said Paula Stern, a former chairwoman of the U.S. International Trade Commission who has served on Avon’s board since 1997. “She’s extraordinarily personable -- she’s very empathetic and a good listener.”

‘An Innovator’

Jung is not the only director with retail experience on Apple’s board. Jobs called on Drexler, a former CEO of Gap Inc., to give advice about Apple’s retail stores, which opened in 2001. York is the former CEO of computer products retailer Micro Warehouse Inc.

What makes Jung unique is her willingness to reinvent herself as the times change, said author Ram Charan, who has worked with Jung as a CEO coach.

“There is this whole ability to sense what’s coming in the future and be able to see a long-term viewpoint and then translate that into real action,” Charan said. “If you sit with her for 10 minutes or more, she will learn more from you through questioning and curiosity, and that’s why she’s an innovator.”

source:bloomberg