Apple retail chief nets nearly $113 million in options move

[AppleInsider]

Apple senior vice president of retail operations, Ron Johnson, recently exercised options for and then sold 700,000 shares of common stock worth approximately $130 million.

According to regulatory filings with the Securities and Exchange Commission, Johnson exercised the 700,000 options at $23.72 apiece on Friday, October 26 -- the same day Apple launched its Mac OS X Leopard operating system -- and then turned around sold the shares on the open market from $185 to $185.21 apiece.

Over 606,000 of the shares, which the retail chief acquired under Apple's 1997 Employee Stock Option Plan, were sold at exactly $185. The remaining shares were sold at various intervals with Apple's share price ranging from $185.01 to $185.21.

Johnson's estimated net profit on the options is approximately $113 million before taxes.

Interestingly, Friday was the second time the Apple retail chief has exercised 700,000 or more options in a single day. Back in August of 2005, when Apple stock was trading in the $45 range, he cashed in on 750,000 shares for a profit of $22.6 million.

Johnson also exercised 300,000 options back in November of 2004 for a profit just shy of $10 million.

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[Delfoniq]

Originally Posted by AppleInsider

Apple senior vice president of retail operations, Ron Johnson, recently exercised options for and then sold 700,000 shares of common stock worth approximately $130 million.

From Wikipedia, "He pioneered the concept of the Apple Retail Stores and the Genius Bar, even in the face of stiff criticism from CEO Steve Jobs." I guess it was time to get his dues .

[SpamSandwich]

Sounds like he finally got his "f"-you money.

[Chris Cuilla]

Originally Posted by SpamSandwich

Sounds like he finally got his "f"-you money.

I think he got his "f"-everybody money.

[K.C.]

Headline says $113mil and article says $130. No big deal, give or take $17mil.

Proof reading is for sissies anyway.

[cubedcompanies]

Originally Posted by K.C.

Headline says $113mil and article says $130. No big deal, give or take $17mil.

Proof reading is for sissies anyway.

700,000 * ~$23 = 16.6 mil.

[fukuhela]

Originally Posted by K.C.

Headline says $113mil and article says $130. No big deal, give or take $17mil.

Proof reading is for sissies anyway.

The $130 mil is the total value he got from the sales. The 113 mil is the net profit from the sale, that is he paid 17 mil for the option back in 1997.

But you're right: Proof reading is for sissies

[polvadis]

Must be nice to have $17 mil to invest, well...launder, into $130 million.

"LAUNDERING. TO CHANNEL MONEY THROUGH A SOURCE OR BY AN INTERMEDIARY." Anyone?

[siaubas]

Originally Posted by ShawnJ

He should have waited a year with Apple's stock predicted to go through the roof again.

I like his attitude. Like he doesn't know that the stock is going to go up again... Heck, if he still was holding what he sold back in 2004 and 2005, he'd get almost half a billion. Instead, he settled for combined "measly" 145 million. Money isn't everything...

[wbrasington]

Gotta love a guy that can't get by for 2 years on over 20 million dollars so he has to cash in another block. Wonder if this block will last him more than 2 years.
Let's see, the Lamborgini is getting old, need to upgrade the garage to put it in so THAT's gonna need another house..... pretty soon you're gonna need dozens of millions if you want to get beyond that '05 lifestyle and get into the iPod era.

Hmmmmm, bet he's got unlimited minutes on his iPhone.
Just and endless number of things to spend this money on.

[JeffDM]

Originally Posted by fukuhela

The $130 mil is the total value he got from the sales. The 113 mil is the net profit from the sale, that is he paid 17 mil for the option back in 1997.

But you're right: Proof reading is for sissies

I don't think he paid for the options then. He was probably given options as part of his compensation. It's a common form of compensation for those that run large businesses.

All that meant is that he has the ability to buy stocks at a certain price even if the market is at a much different price. So for every optioned share that he has, he can buy those shares today at $23, even though they are worth $190 on the market.

[petrokalis]

Originally Posted by ShawnJ

He should have waited a year with Apple's stock predicted to go through the roof again.

He probably couldn't wait another year to cash these in. Most companies have an expiration date on stock options. You have to exercise them or you lose them.

Apple has an upcoming board meeting so most likely he hit his 10 year expiration deadline. Even if you are worth tons of money, why would anyone let free money just walk away?

[JeffDM]

Originally Posted by petrokalis

He probably couldn't wait another year to cash these in. Most companies have an expiration date on stock options. You have to exercise them or you lose them.

Apple has an upcoming board meeting so most likely he hit his 10 year expiration deadline. Even if you are worth tons of money, why would anyone let free money just walk away?

That makes sense, but depending on the source of the money to cash in the options, the purchased stocks might be kept instead of sold.

[thrang]

Originally Posted by polvadis

Must be nice to have $17 mil to invest, well...launder, into $130 million.

"LAUNDERING. TO CHANNEL MONEY THROUGH A SOURCE OR BY AN INTERMEDIARY." Anyone?

How old are you?

You don't "pay" for options unless you exercise them - he didn't need a dime to "invest" up front. He was awarded the options (certain number of share) at a strike price, and if he exercises the options, has pays the per-share strike price - the "cost" of the stock, which is deducted from the profit of exercising the options at current market value.

Further, this is not laundering money


(Why do I bother...)

[suzerain]

I don't understand the people saying he should wait. Just because Apple is predicted to go higher doesn't mean it is going to go higher. Anyone notice that oil's near $100 a barrel before winter when the USA enters the heating season? All stocks could take a heavy beating during a nasty nationwide recession.

It's a game. Turning $23 into $185 is called "winning the game", period. Converting stocks into cold hard cash is smart for many reasons. No matter how much stock is worth, it's only got theoretical (read: complete and utter bullshit) worth, and you can argue the same about money, but money's worth is a bit more 'real' than stock's is. He probably just had a reason to want to have a bunch of liquid cash (investments, etc.).

Anyway, maybe the people here telling him to wait are the same people who never buy a new computer because there might be a faster one in the future?

[Kasper]

Originally Posted by K.C.

Headline says $113mil and article says $130. No big deal, give or take $17mil.

Proof reading is for sissies anyway.

He had to pay about $23 for each share, it wasn't a grant. Hence it cost him about $17M. $130M worth of shares minus $17M = ~$113M.

Thanks,

K

[polvadis]

Originally Posted by thrang

How old are you?

You don't "pay" for options unless you exercise them - he didn't need a dime to "invest" up front. He was awarded the options (certain number of share) at a strike price, and if he exercises the options, has pays the per-share strike price - the "cost" of the stock, which is deducted from the profit of exercising the options at current market value.

Further, this is not laundering money


(Why do I bother...)

A little sense of humor never hurt anyone. Watch "Office Space" and you'll get the quote. Don't take yourself so seriously or you gonna pull something.

[DavidW]

Can some one explain to me the math concerning these 700,000 shares. If Johnson got these options in 1997, then what happened to the two splits that AAPL had between now and then. I'm sure his strike price wasn't $94.88 and went down to $23.47 after the two splits. If his initial strike price was $23.47, shouldn't it only cost him $5.87 to exercize them now? Or did the strike price remain the same but the amount of shares went from 175,000 to 700,00? But wouldn't you get screwed if the split cause the share price to drop below your strike price? If Johnson had exercise all (700,000) his options in 1997 for $23.47 and kept his shares, wouldn't he be cashing in 2,800,000 shares of AAPL at $185.00 now? Granted if he could come up with the $17 million to buy his options at the time. Or he could have waited for AAPL to reach $50.00 (before the first split) and exercize all his options and used half the proceed to paid for it (and tax) and the other half (350,000 shares of AAPL) would be his for "free". This would still result in him having 1,400,000 shares of AAPL after two splits.