APPLE’S STRATEGIES TO OVERCOME PRINCIPAL-AGENCY PROBLEMS

CEO vs. Shareholders conflicts in APPLE

APPLE VS SUPPLIERS: FAXCOON VIOLATIONS

APPLE’s RESPONSE Training of Employees Tracking Activities of Suppliers Main Sanctions over Suppliers Impact of Solutions on Faxconn

Solutions for CEO vs. Shareholders conflicts in APPLE

Incentives- mainly depending on the future prospects of CEO, equally cut incentives for a failure

Apple Inc CEO Tim Cook received compensation for 2012 valued at 4.17 million but no stock option vs Steve Jobs received compensation of $378 million and accompanied with 376.2 million in stock awards

executive officers have to hold triple of their base salary in company stock

the importance of converting Agents to Principals

APPLE VS SUPPLIERS:FAXCOON VIOLATIONS

Huge Contrast-bilions of profits and worker conditions

Fair Labor Ass. Report Faxcoon; employees rights violated

-working more than 60hr( 40+36/ monthly)-Overtime compensation-Health and Safety

APPLE’s RESPONSE:Supplier Responsibility Progress Report’

Training of Employees

Apple considers training program is crucial that more workers understand their rights, more they will able to speak up when their rights are violated. Since 2007, more than 3.8 million workers and managers have attended training program including 1.5 million in 2013.

Tracking Activities of Suppliers

revitalized its supply chain activities to increase the standards and solve the problems.

In Exhibit 2, Apple announced their suppliers according to the locations.

Apple has also publicized their list of suppliers suppliers

Main Sanctions over Suppliers

tracked work hours of employees throughout their supply chain activities

exerting pressure on their suppliers to achieve an average of 60hrs workweek

Continuously conducting audits at factories to preserve the rights of migrant workers.

conducted 451 audits at all levels of supply chain. (51% increase from 298 audits in 2012)

Apple Supplier Environment, Health and Safety Academy- accomplished more than 520 site profile surveys for decreasing environmental risks including the Clean Water Program with 13 suppliers

Impact of Solutions taken by Apple on Foxconn

Foxconn - bring its factories into full harmony within Legal limits -working hours into 49 hrs including overtime.

Fairly payment for all overtime as well as work-related meetings outside of regular working hours

Fair Labor Association - obliges them to pay any worker for their unpaid hours in the past.

Faxconn promised to report all accidents.