Will Apple CEO Steve Jobs' 'medical leave' hasten talks of his succession?

Apple's CEO Steve Jobs has announced that he is going on medical leave, in an email to the iPad maker's employees, giving weight to a proposal for a CEO succession plan pushed by certain shareholders.

The mail sent to the employees said: At my request, the board of directors has granted me a medical leave of absence so I can focus on my health. I will continue as CEO and be involved in major strategic decisions for the company.

Company COO Tim Cook will be at the helm handling the company's day-to-day operations.

However, the report comes just days after Apple recommended its shareholders to vote against the demand for a CEO succession plan at the annual meeting of shareholders in February.

The recommendation discourages the shareholders to vote against the shareholder proposal entitled Amend the Company's Corporate Governance Guidelines to adopt and disclose a written CEO succession planning policy.

The proxy statement states that the Central Laborers' Pension Fund, which owns 11,484 shares in the company, is aspiring to present a proposal which details the guidelines to find suitable successor to the CEO. The plan demands that the CEO succession plan be annually reviewed by directors, development of specific criteria to select a CEO and a specific plan to develop internal candidates for the profile.

Apple is rallying voters against the demand on the grounds that the succession plan would jeopardize its competitive advantage as it would give the Company's competitors an unfair advantage. Proposal No. 5 would publicize the Company's confidential objectives and plans.

It further stated that the proposal would undermine the Company's efforts to recruit and retain executives. The Board believes that the Company's success depends on attracting and retaining a superior executive team, including the CEO. Proposal No. 5 requires a report identifying the candidates being considered for CEO, as well as the criteria used to evaluate each candidate. By publicly naming these potential successors, Proposal No. 5 invites competitors to recruit high-value executives away from Apple. Furthermore, executives who are not identified as potential successors may choose to voluntarily leave the Company.

Apple has largely depended on its enigmatic leader Steve Jobs for the current run of successes. However, Jobs' health has caused concerns since he was diagnosed with pancreatic cancer in October 2003.

Apple faces the same dilemma as many Silicon Valley companies that are driven by their enigmatic leaders. And even if the companies have a strategy many have returned to once again take the helm like Dell CEO Michael Dell who returned after appointing Kevin Rollins as CEO in 2004.

Also Oracle's charismatic founder and CEO Larry Ellison has not named a successor. However, Microsoft was able to develop a successor to CEO Bill Gates when Steve Ballmer took over in 2000.

Steve Job's medical leave is sure to fuel debate over the CEO succession plan in Apple, as to whether the company should recruit a CEO from outside the company like HP did by recruiting Carly Fiorina and most recently Leo Apotheker from SAP or wait for a successor to come from the ranks of Apple. Apple itself had recruited John Sculley, President of PepsiCo, who later replaced Steve Jobs when he left the helm in 1985. Also Michael Spindler was hired from Apple Europe and Gil Amelio was hired from National Semiconductor. The current situation is sure to add weight to Central Laborers' Pension Fund' demand for a comprehensive CEO succession plan, taking fizz away from the iPhone Veizon launch.