Calpers, the biggest US pension fund, will withhold votes for Apple Computer's entire board of directors after it failed to implement a shareholder-approved proposal to treat stock options as an expense.
The California Public Employees' Retirement System, which has assets of about $167 billion, also criticised Apple's board for authorising Apple's auditor, KPMG, to perform non-auditing, or consulting services, for the maker of Macintosh computers and the iPod digital music players.
Calpers said it would withhold voting its 1.48 million shares from the entire board, vote them against ratifying Apple's auditor, and against a shareholder proposal limiting executive compensation, saying the "proposal is too restrictive."
Technology companies have strenuously opposed accounting for stock options as an expense, arguing it drags down earnings because so much of their compensation to workers is in the form of options. Also, they argue that it is difficult to accurately value stock options, and that options must be awarded to retain engineers and other mid-level workers who might otherwise be lured to competitors.
Calpers, one of the nation's best known corporate governance activists, has been critical of the Apple board in the past, citing its decision to award chief executive Mr Steve Jobs a $90 million jet as part of his compensation.
Calpers is withholding votes for Apple board members Mr William Campbell, Mr Millard Drexler, former US vice president Mr Al Gore, Mr Jobs, Mr Arthur Levinson and Mr Jerome York, all of whom are standing for reelection.
Calpers also noted that Mr York, chairman of the audit committee, is the former chairman, president and chief executive of MicroWarehouse, a major reseller and a buyer of Apple's wares.