It’s been nearly three years since Gilbert Amelio was abruptly ousted from the CEO slot at Apple Computer, capping off a brief but tumultuous 17-month tenure. Accused of being a remote technocrat, Amelio took his fair share of knocks, including criticism of his $10 mn severance package. While it took time for the bruises to heal, Amelio has been proving there is life after Apple, though he’s quick to point out he also had a very good life before Apple, thank you very much.
The issue of compensation remains important to Amelio, who has become actively involved in questions of corporate governance. He recently gave a keynote speech at the Investor Responsibility Research Center’s January governance2000.com conference, held in New York, where he warned dot-com companies of the need to add more independent directors to their boards. ‘Business is business. Companies are all the same, dot-coms or not. Start-ups are focused and don’t need big boards, but they have to be independent.’
Amelio doesn’t offer a glowing assessment of Apple’s recent decision to award CEO Steve Jobs options for 10 mn shares of company stock — about 6.2 percent of all outstanding Apple shares — along with a Gulfstream Jet. ‘It’s bad corporate governance. It’s going to lead other CEOs to say, Let’s stock the board with friends. Executives should be well paid, but not absurdly paid. One or two million shares is okay, depending on the company. But don’t give options at one time. Give options more often if you want, but not all at once. They should have given [Jobs] the opportunity to earn 1 mn shares a year over the next ten years.’
Amelio points out that stock grants are more effective than options. Stock grants provide more performance incentive to employees, and they don’t run up in value, as options do. As for the argument that Jobs has been working at Apple for a nominal salary and deserves a large pay-out, Amelio is insistent: ‘I don’t see how you justify that compensation. He personally walked away with $200 mn when I purchased [Next Software], so he already was well compensated by Apple.’
Amelio earned his PhD in Physics at Georgia Tech in 1968 and went to work at Bell Labs. There he tackled a revolutionary new project, the charged coupled device (CCD), which he would co-invent in the mid-1970s. ‘I’m prouder of that achievement than anything else. It changed the world, and has a lasting impact, from camcorders to the Hubble Telescope. These things wouldn’t have been possible.’ While he hasn’t exactly fallen back into science, Amelio is in effect back to the job of inventing, working with small start-ups through his own company, Amtech. ‘The last two years have been the most fulfilling of my life. I’m mentoring and advising young companies, and helping them grow. I might even make some money doing it, but that’s not the point — I enjoy the work. I haven’t drawn a salary in two years.’
Amelio made a name for himself in the corporate world as chairman, CEO and president of National Semiconductor, where he engineered a dramatic turnaround, taking the company from $151.4 mn in losses in 1990 to a $264.2 mn profit in 1995. As an Apple board member, he was tapped for the top job at the computer company, whose market share was already in free-fall, in February 1996. Amelio is credited with addressing some of the company’s most acute problems, but with mounting pressure from shareholders demanding immediate results, board members ultimately decided his three-year plan to restore Apple to sustainable health was too long.
As for the current upward swing in Apple’s fortunes and its ballooning stock price, Amelio says he feels vindicated, noting that profits are a lagging indicator of performance. ‘At Apple, I came up with a five-point strategy for moving forward. That strategy is behind the current success. There are leading indicators of performance, and I knew the indicators looked good, but the board didn’t have the courage to work with me. They believed in the strategy, but they panicked.’
At National Semiconductor, Amelio instituted annual strategic retreats to allow directors to ‘roll up their sleeves and get down to business,’ a practice he was hoping to institute at Apple. He says such retreats are an effective way to forge consensus, and he believes boards often make the mistake of conducting too much of their work through committee.
These days, Amelio has left the hyperkinetic world of Silicon Valley behind him, as well as the outsized egos that dominate the landscape. ‘You have to have an ego to be a CEO. It’s a lonely job, and at the end of the day, your ego sustains you. But that’s all behind me. I’ve scaled down my lifestyle. I sold a big house I owned in Silicon Valley and bought an apartment in San Francisco. I walk to work, and I have a wonderful view of the bay. My wife and I are much happier.’
