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Over its previous opposition, Apple (AAPL) implemented earlier this month a plan requiring...

Over its previous opposition, Apple (AAPL) implemented earlier this month a plan requiring executive officers to hold 3x their annual base salary in stock. The CEO is required to hold 10x his salary, and independent directors 5x their retainer.
Comments (26)
  • gsterling
    , contributor
    Comments (733) | Send Message
     
    I wish every company would implement this.
    28 Feb 2013, 03:53 PM Reply Like
  • DavidTTaylor
    , contributor
    Comments (62) | Send Message
     
    Agree with you, this is good leadership
    1 Mar 2013, 06:16 AM Reply Like
  • tommangano2000
    , contributor
    Comments (14) | Send Message
     
    This seems great at first glance. However, every executive and director is provided with stock/stock options upon achieving those levels. IMO it is little more than a massage job for the shareholders and Markets.
    28 Feb 2013, 03:57 PM Reply Like
  • Thomas903
    , contributor
    Comments (121) | Send Message
     
    I don't know the inside details behind the stock/options grants given to Tim Cook et al, but am very happy that he/they are committed to Apple over the next decade. I'm certain that Samsung, Google, Amazon and others would be happy to pay Apple's execs a higher salary than they're currently earning. Having said that, I don't mean to downplay the kinds of abuses that you (and others, below) are pointing to. No company is immune.

     

    Don't forget that the requirement that execs hold shares valued at 3x their base salary was implemented long AFTER the stock/options grant.  Thus, we should consider the stock/options grant and requirement separately.  The latest measure limits the sale of shares by Apple execs, and that's good for AAPL investors.

     

    Moreover, the fact that execs have large holdings of shares that they can't sell --- no matter how they received those shares --- creates a powerful incentive for them to work toward the company's long-term profitability.  That's also good for shareholders.

     

    I vote yes on this measure!
    28 Feb 2013, 06:54 PM Reply Like
  • RUReady2RNR
    , contributor
    Comments (27) | Send Message
     
    What I have noticed that typically happens elsewhere, is these individuals receive the requisite stock shares at no cost over several years as an increase in the number "performance shares", awarded for a job well done. It is not like that are responsible for acquiring the shares on their own, they are just given more stock. All approved by the Board who will also gain. Seems a little incestuous.
    28 Feb 2013, 03:59 PM Reply Like
  • Closet Iguana
    , contributor
    Comments (159) | Send Message
     
    I'm sure this wasn't the news shareholders were waiting for.
    28 Feb 2013, 04:10 PM Reply Like
  • James McRitchie
    , contributor
    Comments (86) | Send Message
     
    Not so difficult, given Peter Oppenheimer, Apple’s chief financial officer, Bruce Sewell, general counsel, Bob Mansfield, head of technologies, and Jeff Williams, in charge of operations, all received restricted stock award worth around $60m. The idea of holding x times salary or some proportion of net worth is to align with company. This doesn't work so well when the share you need to hold are given to you.
    28 Feb 2013, 04:11 PM Reply Like
  • kkeate
    , contributor
    Comments (23) | Send Message
     
    It's better then nothing I guess
    28 Feb 2013, 04:13 PM Reply Like
  • cymonian
    , contributor
    Comments (22) | Send Message
     
    I feel like implementing this sort of measure will hinder efforts of sustainable business in favor of measures which boost stock price temporarily at the cost of long term competitiveness.
    28 Feb 2013, 04:14 PM Reply Like
  • Tusc
    , contributor
    Comments (277) | Send Message
     
    Well, at least they were aware of stock decline.
    28 Feb 2013, 04:18 PM Reply Like
  • didkie
    , contributor
    Comments (52) | Send Message
     
    I wish I had 10 times Cooks annual salary in APPL stock....
    28 Feb 2013, 04:27 PM Reply Like
  • Camden
    , contributor
    Comments (1341) | Send Message
     
    I'd like 1/10th.
    28 Feb 2013, 10:19 PM Reply Like
  • BruceInKY
    , contributor
    Comments (437) | Send Message
     
    I'd settle for 1/100th
    28 Feb 2013, 11:06 PM Reply Like
  • echinio9
    , contributor
    Comments (54) | Send Message
     
    Agree its not as effective as having the chief execs to buy those stocks out of their own pocket. However, its still good to use greed as motivation factor to drive their gains in the right direction. At the end of the day, their wealth interests are aligned with us shareholders.
    28 Feb 2013, 04:40 PM Reply Like
  • croatkid1
    , contributor
    Comments (211) | Send Message
     
    Looking at the pot from a different direction; one could imagine those gifted individuals "demanding" that their pay and gifted stock make up for their directed share count.....

     

    You made me do it, I didn't want to love you???
    28 Feb 2013, 04:50 PM Reply Like
  • New Low Observer
    , contributor
    Comments (2141) | Send Message
     
    The follow up should read as follows:

     

    "...in an effort to conceal their desire to sell the stock at any price."

     

    why should any apple exec sell their stock when an IB can lend them the value of their shares at below market rates and offer low cost equity collars on the same shares? There is no need for disclosure and no one gets uptight about insider selling, since "officially" the shares haven't been sold.

     

    Many Silicon Valley execs gladly participated in this product when we offered it. In some cases, it was the only way they could cash out without raising a stink. Still a lot of that going around.

     

    Too bad they didn't hold SteveJobs to this standard in when he sold massive amounts of stock on June 1997 and April 2001.

     

    Regards
    28 Feb 2013, 05:50 PM Reply Like
  • Thomas903
    , contributor
    Comments (121) | Send Message
     
    @New Low Observer - "Too bad they didn't hold SteveJobs to this standard when he sold massive amounts of stock on June 1997 and April 2001."

     

    If all Apple execs had the same commitment to Apple as Steve Jobs, they wouldn't need a monetary incentive to tie them to Apple or guarantee their commitment to the company's success.  I don't know why Jobs sold AAPL in 1997 and 2001, but it doesn't cause me to wonder for a second whether that sale detracted from his contribution to Apple's success.

     

    What evidence do you have that Apple execs have a "desire to sell the stock at any price"?  Did Cook sell a large number of shares over the months before the new rule was adopted?  Regarding the use of equity collars: Are you specifically claiming that Apple execs use equity collars to hedge their shares? (Please provide a link to your evidence.)  If Tim Cook believes that shares will rise to (say) $800 in two or three years, wouldn't that justify holding AAPL without equity collars?
    28 Feb 2013, 07:12 PM Reply Like
  • New Low Observer
    , contributor
    Comments (2141) | Send Message
     
    While working for a large investment bank in Silicon Valley, we routinely provided equity collars for Silicon Valley executives who borrowed against the value of their stock. This isn't some kind of conjecture that has been postulated, you're getting first hand commentary from someone who processed those transactions.

     

    You said:

     

    "I don't know why Jobs sold AAPL in 1997 and 2001, but it doesn't cause me to wonder for a second whether that sale detracted from his contribution to Apple's success."

     

    Another fact that you might not be aware of is that in each case that Steve Jobs sold his stock (in 1997) was after (AAPL) stock declined from the April 1991 high of $18 to the low of $3.67 in March 1997, a loss of -78.82%. Two months later, Microsoft invested $150 million in Apple (August 6, 1997).

     

    [CORRECTION: THE SALE WAS 2003, NOT 2001] The second sale, which took place around April 2003, at $7.07, after the stock had declined -80% from the March 2000 high of $36.04.

     

    Steve Jobs' contribution to the company isn't in question on this matter. What is in question is the propensity and desire of Apple executives to sell their stock at the wrong time. As the head goes so goes the body.

     

    Again, as first-hand experience has much to play in this commentary, when a CEO wishes to sell, so too will those under him/her. You may wish to believe otherwise, however, the rule in investment banking was, “get one member of the executive team, and you’ve got them all.”

     

    The mistaken belief that the restrictions on selling the stock provides some kind of vested interest on the part of the executive team is more for PR purposes. This requirement to restrict selling of share in excess of salary by a specific multiple is the equivalent to the short sale ban on financial stocks in September 2008. In an effort to stem the tide it couldn’t and would work. As with the (XLF), it decline an additional -72% after the ban on short selling was implemented. As with Apple, this new restriction on selling will hasten any declines that may emerge going forward.

     

    Naturally, there is resistance to this view, as was the case when we wrote that AAPL would fall to $424 when the stock was trading at $636 (found here: http://bit.ly/VRg6Ll).

     

    Regards.
    28 Feb 2013, 08:25 PM Reply Like
  • hahaha48
    , contributor
    Comments (1146) | Send Message
     
    first this is a tiny amount. it should be 33% of all their awards and even that is small because they do not have to pay for it and cost them nothing.
    secondly if they want to they can just have their spouse or a close relative or friend to short the stock.
    28 Feb 2013, 06:16 PM Reply Like
  • thatch
    , contributor
    Comments (59) | Send Message
     
    It's better than the worker who gets the minimum wage of $7.25.
    28 Feb 2013, 06:34 PM Reply Like
  • Loophole69
    , contributor
    Comments (197) | Send Message
     
    I wonder why the market place would only pay someone $7.25/hour?
    28 Feb 2013, 08:27 PM Reply Like
  • u01bsb0
    , contributor
    Comments (667) | Send Message
     
    It is just an incentive to work harder to maintain/grow the company over the future. Many companies do this.
    I am glad Cook stresses that he wants long term growth over short term volatility in the stock.
    28 Feb 2013, 08:03 PM Reply Like
  • streetwatcher
    , contributor
    Comments (107) | Send Message
     
    Thomas903
    FYI, S.Jobs salary was $1.00
    28 Feb 2013, 08:13 PM Reply Like
  • greg1172
    , contributor
    Comments (51) | Send Message
     
    what a wasted dollar that was too :)
    28 Feb 2013, 11:49 PM Reply Like
  • greg1172
    , contributor
    Comments (51) | Send Message
     
    consider Tim Cook makes about 1m a year in salary and his stock compensation is along the orders of 500,000 shares. his total comp last year was around $350,000,000 with almost all of that in stock. not sure making him keep 10m in stock is a big deal at ALL.

     

    Cook should be incented but keep in mind, when you are making a couple hundred million dollars a year, giving up $50M has absolutely NO impact on your quality of life. i mean, what, now you cant buy uhhh, what a space shuttle i mean my god man what do you do with the last $300M a year. thats a million/day tim cook makes. and hes on a 10 year contract. he'll likely be worth 5-10Billion by the time his contract is over.

     

    why don't they just pay a better dividend, split the damn stock and release a new product. then all the shareholders will be happy. good lord man why is it so damn hard
    28 Feb 2013, 11:48 PM Reply Like
  • pocohonta
    , contributor
    Comments (601) | Send Message
     
    I smell "legal" insider trading in disguise. A self-mandated "required stock purchase" by the executives themselves. I guess the stock won't start to climb until all the executives complied and fully loaded.
    1 Mar 2013, 12:19 AM Reply Like
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