Tim Cook sells another $3.6M batch of Apple stock

AppleInsider

Continuing a planned stock selloff that began earlier in January, Apple CEO Tim Cook this week sold a chunk of 30,000 AAPL shares worth $3.64 million, bringing his full-week total to nearly $11 million.

The trades were accomplished in three equal transactions at prices ranging from $120.28 to $122.24 on Jan. 25, 26 and 27, according to a U.S. Securities and Exchange Commission filing made public on Friday. Following this week's selloff, Cook is left with 949,809 shares of Apple stock currently worth about $116 million.

As with two other recent transactions, the trades reported today were made pursuant to Cook's trading plan adopted in 2015. A pair of regulatory filings, one published last week and another on Monday, reveal Cook shed 60,000 shares of company stock in six separate transactions as part of the same trading plan.

Including the trades reported today, Cook in the last week sold 90,000 shares worth nearly $11 million.

The payday comes after Apple's executive team, including Cook, was docked bonus pay as a result of middling company financials due in large part to a slowdown in iPhone sales. For 2016, Apple brought in $215.6 billion in net sales and generated operating income of $60 billion, but the metrics were short of goals set by the company's compensation committee.

Though he missed out on the $1.5 million performance bonus, Cook still has his $116 million hoard of vested AAPL shares and is set to receive another 700,000 vested RSUs on Aug. 24, 2021. The Apple chief can also make up for lost time with five 280,000-unit performance-based RSU packages set to vest in annual installments through 2021.

cali

Ok....
now im actually getting worried.

jfc1138

cali said:

Ok....
now im actually getting worried.

A plan he set up in 2015?

"As with two other recent transactions, the trades reported today were made pursuant to Cook's trading plan adopted in 2015."

yawn. 

anantksundaram

cali said:

Ok....
now im actually getting worried.

Either you're not a shareholder, or you are.

If you are not, why are you worried? If you are, why don't don't you just sell and get out, and spare us the angst?

doggone

One word:  Taxes
When you have that many stocks you end up with a huge tax bill each year.  Easiest way to pay of the bill is to sell stocks to cover it.

anantksundaram

doggone said:

One word:  Taxes
When you have that many stocks you end up with a huge tax bill each year.  Easiest way to pay of the bill is to sell stocks to cover it.

Really, that's all there is to it. People trying to read into it some ulterior motive or deep hidden signals regarding Apple's prospects are on a wild goose chase. 

saltyzip

How the other half live. 

Rayz2016

cali said:

Ok....
now im actually getting worried.

That's because you didn't read the article 

theothergeoff

saltyzip said:

How the other half live. 

half?   it's a cute phrase, but this is much closer to the 'other half percent'

StrangeDays

cali said:

Ok....
now im actually getting worried.

Unless you're his financial adviser I can't imagine why. People like having money. 

carnegie

By my calculations, Mr. Cook has now sold a tad less than 50% of the shares (net of tax withholding) that he's been awarded and has received since becoming CEO. That doesn't include shares that he was awarded before he became CEO but which vested while he's been CEO. He's sold all but 70,000 of those.

Since becoming CEO he's received about 3.45 million of the shares he was awarded when he became CEO. He has another 3.5 million from that grant which have yet to vest. Those are the only shares he's been awarded since becoming CEO. Of those about 3.45 million, about 1.79 million were withheld by Apple for tax purposes, leaving Mr. Cook receiving about 1.66 million shares total. He's sold about .82 million of those shares. (To be clear, the shares he sells come from his full pool of shares and aren't identified, when sold, specifically as shares that came from this or that award.) He's also, since becoming CEO, donated 50,000 shares and purchased more than 1,500 at a discount through Apple's employee stock purchase plan.

Also, for the OP... Mr. Cook actually missed out on $6.63 million in performance bonus (i.e. non-equity incentive compensation) for 2016, not $1.5 million. He could have earned a bonus equal to 400% of his base salary, but only earned a bonus (of $5.37 million) equal to 179% of it. His reported total compensation was nearly $1.5 million less than for 2015. That included a base salary increased by $1 million, a bonus reduced by $2.63 million, and assorted other forms of compensation (i.e. life insurance premiums, vacation cash-out and security expense allocation) increased by around $.1 million.

carnegie

doggone said:

One word:  Taxes
When you have that many stocks you end up with a huge tax bill each year.  Easiest way to pay of the bill is to sell stocks to cover it.

A portion of the shares (in recent years, more than 50% of them) are withheld for tax purposes when they vest. So Mr. Cook shouldn't need to sell shares to get cash to pay the (ordinary income) taxes on them. If he later sells shares, he might have capital gains (based on an increase in share price between when he received them and when he sold them) which he owes taxes on. But he wouldn't realize (and thus owe taxes on) those gains until he sold. So he wouldn't need to sell shares that he otherwise didn't wish to sell to get cash to pay those taxes.

Anyway, looking at his history of share sales, I suspect these shares were sold because his plan (from a year and a half ago) called for a certain amount of shares to be sold when the share price hit $120.

bobroo

You can insert all the excuses you want to but a CEO of any publicly traded company selling shares at this rate only means one thing, PERIOD.

He believes that the price of APPL is higher now than it will be in the foreseeable future. 

This is a cash grab.

k2kw

bobroo said:

You can insert all the excuses you want to but a CEO of any publicly traded company selling shares at this rate only means one thing, PERIOD.

He believes that the price of APPL is higher now than it will be in the foreseeable future. 

This is a cash grab.

Yep, the Sells may have been planned a long time ago, but when to release the financial results was probably planned much more recently.   In 2014-2016 the financials were released on either January 26 or 27 according to Apples website.   This year they are push back to the 31st.    

carnegie

k2kw said:

bobroo said:

You can insert all the excuses you want to but a CEO of any publicly traded company selling shares at this rate only means one thing, PERIOD.

He believes that the price of APPL is higher now than it will be in the foreseeable future. 

This is a cash grab.

Yep, the Sells may have been planned a long time ago, but when to release the financial results was probably planned much more recently.   In 2014-2016 the financials were released on either January 26 or 27 according to Apples website.   This year they are push back to the 31st.    

For those years the first quarter ended sooner than it did for this year. Apple's quarters end on Saturdays, not on the last day of a month. For the years you referred to, the earnings release came either 30 or 31 days after the end of the first quarter just as it will this year. The releases for those years came on either the Monday or Tuesday that was 4 weeks plus past the Saturday on which the quarter ended. That's been pretty typical for Apple over the last few years (though there have been exceptions).

This latest set of share sales by Mr. Cook began on the 17th and Apple's earning release certainly wouldn't have come sooner than that. At a minimum it would have been 3 weeks plus after the quarter ended.

These recent sales were most likely triggered by AAPL hitting $120, not by a date selected a year and a half ago. Since that plan was put in place, there have been two times when AAPL hit $120. Both times Mr. Cook has sold shares over a period of several days. And those two times are the only times Mr. Cook has sold shares during that period other than right after the vesting of a block of shares.

bobroo

carnegie said:

These recent sales were most likely triggered by AAPL hitting $120, not by a date selected a year and a half ago. Since that plan was put in place, there have been two times when AAPL hit $120. Both times Mr. Cook has sold shares over a period of several days. And those two times are the only times Mr. Cook has sold shares during that period other than right after the vesting of a block of shares.

While there may have been a pre-set sale scheduled at the $120 price point, TC would have also hit the cancel button if he believed that the price was soon going to go over $130, $150, or whatever higher amount....

You make a good point that the 2016 4Q earnings release could be delayed slightly due to calendar fluctuations. 

zoetmb

doggone said:

One word:  Taxes
When you have that many stocks you end up with a huge tax bill each year.  Easiest way to pay of the bill is to sell stocks to cover it.

Not really.  You have a tax bill for dividends, which are just a few percent of your holdings (the dividends, not the tax bill).  You have a tax bill for capital gains on stocks you've sold for a gain, but you have no tax bill if you don't sell anything or on your losses.     But depending upon at what price his options were at, he'll have a huge tax bill for the Apple stock he's selling (which he wouldn't have had if he didn't sell). 

I'm certainly no expert on investing, but I tend to sell off losses at the end of the year to offset any gains to (legally) limit tax liability.   

carnegie

bobroo said:

carnegie said:

These recent sales were most likely triggered by AAPL hitting $120, not by a date selected a year and a half ago. Since that plan was put in place, there have been two times when AAPL hit $120. Both times Mr. Cook has sold shares over a period of several days. And those two times are the only times Mr. Cook has sold shares during that period other than right after the vesting of a block of shares.

While there may have been a pre-set sale scheduled at the $120 price point, TC would have also hit the cancel button if he believed that the price was soon going to go over $130, $150, or whatever higher amount....

You make a good point that the 2016 4Q earnings release could be delayed slightly due to calendar fluctuations. 

In theory he could cancel sales set to happen pursuant to an established plan, but that could be problematic legally. The actual cancelation itself likely wouldn't represent a violation of insider trading laws. But it would mean that the plan wasn't proper to begin with, and as such wouldn't rightfully provide the affirmative defense (to possible insider trading accusations) which is the point of having the plan. Such plans can use various criteria to trigger future trades, but whatever criteria they use they are not supposed to leave the insider (e.g. Mr. Cook) with discretion over those future trades. Otherwise someone could, e.g., have a plan that says sell 100,000 shares each week for the next two years (or until all of their shares are sold). Then they could just cancel all of those sales unless for some reason, based perhaps on non-public material information, they decided they wanted to actually sale shares one day. Insider trading? No, that sale was planned a year ago. Well... that's not quite how it works.

I think it extremely unlikely that Mr. Cook would cancel a planned sale like this because he thought he could get a few more dollars in a month or a year. Perhaps some corporate executives would, but his track record suggests the contrary. His prior actions suggest that squeezing every extra dollar he can out of his time as Apple's CEO is not his main priority. He has, among other things, refused his right to collect dividends (in effect) on unvested RSUs - something that has cost him millions of dollars. Others with Apple (and with other companies) collect such dividends. He also renegotiated the terms of the large RSU grant that he received when he became CEO such that 40% of the shares were conditioned on certain (stock) performance targets. As it was, he would have received all of them if he stayed long enough. With the renegotiation, he could lose some of them (while the maximum he could get remains the same) if AAPL misses its targets - something that is quite possible in coming years because the stock did so well in earlier years.

carnegie

zoetmb said:

doggone said:

One word:  Taxes
When you have that many stocks you end up with a huge tax bill each year.  Easiest way to pay of the bill is to sell stocks to cover it.

Not really.  You have a tax bill for dividends, which are just a few percent of your holdings (the dividends, not the tax bill).  You have a tax bill for capital gains on stocks you've sold for a gain, but you have no tax bill if you don't sell anything or on your losses.     But depending upon at what price his options were at, he'll have a huge tax bill for the Apple stock he's selling (which he wouldn't have had if he didn't sell). 

I'm certainly no expert on investing, but I tend to sell off losses at the end of the year to offset any gains to (legally) limit tax liability.   

Apple doesn't use stock options for its top executives anymore. What Mr. Cook and others receive are restricted stock units. They receive shares when those RSUs vest, they don't have to pay anything for the shares.

They do have to pay capital gains on the difference between the price they sale the shares at and the value of those shares on the day they vested. But they pay ordinary income tax on the value of those shares when they vested. Typically Apple withholds a portion of the shares when they vest (in Mr. Cook's case, more than 50% of them) for tax purposes.

linkman

bobroo said:

You can insert all the excuses you want to but a CEO of any publicly traded company selling shares at this rate only means one thing, PERIOD.

He believes that the price of APPL is higher now than it will be in the foreseeable future. 

This is a cash grab.

If you are Larry Ellison it only means you have another yacht payment to meet.

yojimbo007

carnegie said:

bobroo said:

carnegie said:

These recent sales were most likely triggered by AAPL hitting $120, not by a date selected a year and a half ago. Since that plan was put in place, there have been two times when AAPL hit $120. Both times Mr. Cook has sold shares over a period of several days. And those two times are the only times Mr. Cook has sold shares during that period other than right after the vesting of a block of shares.

While there may have been a pre-set sale scheduled at the $120 price point, TC would have also hit the cancel button if he believed that the price was soon going to go over $130, $150, or whatever higher amount....

You make a good point that the 2016 4Q earnings release could be delayed slightly due to calendar fluctuations. 

I think it extremely unlikely that Mr. Cook would cancel a planned sale like this because he thought he could get a few more dollars in a month or a year

Very true.. thanks for very informative posts. 👍