Apple exec Scott Forstall sells 95% of company shares worth $38.7M

Posted:
in General Discussion edited January 2014
Apple's iOS chief Scott Forstall recently sold 65,151 shares of AAPL stock, or 95 percent of his stake in the company, totaling $38.7 million.

Forstall, who is senior vice president for iOS software at Apple, made the transaction last Friday, documents filed with the U.S. Securities and Exchange Commission reveal. The shares were the remains of a retention bonus granted to Forstall in 2008 worth 120,000 shares, as noted by Fortune.

After selling off the bulk of his AAPL stock, Forstall still owns just 2,988 shares in the company. As of Friday's closing price, they were worth $1.8 million total.

Forstall is due to benefit from another 100,000 restricted stock units that fully vest in 2014, and 150,000 restricted units that vest in 2013 and 2016, should he stay with the company.

Forstall surrendered the shares needed to pay taxes on his awards in March, once restricted stock he received in 2008 became fully vested. At the same time, Apple Chief Executive Tim Cook, CFO Peter Oppenheimer and marketing chief Phil Schiller sold hundreds of thousands of shares, netting them a collective total of about $150 million after taxes.

Beyond his own stock bonuses, Forstall earns a salary of $700,000 per year running Apple's iOS software division.

Forstall was profiled in January as Apple's "CEO-in-waiting" by Adam Lashinsky, author of the book "Inside Apple." The book argues that Forstall most closely resembles late Apple co-founder Steve Jobs, making him the most obvious candidate to eventually succeed him.

Forstall and Jobs
Steve Jobs takes the stage from Scott Forstall at WWDC | source: ibtimes.com


Last October, BusinessWeek also profiled Forstall, and called him a "maddeningly political" mini-Steve Jobs. That story claimed that though Forstall is brilliant at identifying what he wants and how to get it, he can also be difficult to work with, and has allegedly prompted the departure of several high-ranking Apple executives over the years.

Whether or not Forstall actually is hard to work with, he's been an integral part of Apple's iPhone and iPad business, which have taken the company's sales ? and stock price ? to new heights.
«1345

Comments

  • Reply 1 of 88
    asciiascii Posts: 5,941member


    95%! He has watched Tim for a year and concluded he is no Steve.

  • Reply 2 of 88
    MacProMacPro Posts: 17,881member


    I hope he isn't leaving ...  That next 100,000 should be worth waiting for Scott!

  • Reply 3 of 88
    mauszmausz Posts: 242member

    Quote:

    Originally Posted by digitalclips View Post


    I hope he isn't leaving ...  That next 100,000 should be worth waiting for Scott!



     


    40mln+ (only in bonusses) isn't enough ?

  • Reply 4 of 88
    antkm1antkm1 Posts: 1,441member


    Can anyone explain what the possible ramifications of this could be?


    To me it says if he's relinquishing a large lump of his stock, he must see something coming up that might prompt him to leave.


    Or, if this article rings true about him paying his taxes with the sold stock...that seems a bit odd that his accountant hasn't found some loophole around the tax code to allow him to keep what he had.


    With all this talk about corporate loopholes and tax shelters related to stocks and such, it seems odd that paying his taxes off with sold stocks would be a logical alternative.

  • Reply 5 of 88
    mcrcnmcrcn Posts: 27member


    The title is very misleading, since he has interest in a ton of Apple stock if he stays with the company.  

  • Reply 6 of 88
    studiomusicstudiomusic Posts: 591member


    Easy, his stock vested, and AAPL is bumping around the all-time high. He's getting TONS more stock in the future.


    Why not take some profits and make the bank account grow?


    He has to have filed a while ago to be legal, so it's not like he is saying Apple is going down from here.


    It's business. And lots of cash.

     

  • Reply 7 of 88
    rogifanrogifan Posts: 10,669member
    Didn't Bob Mansfield sell a bunch of stock a couple months back too? Heck Jony Ive is probably doing the same thing except we don't know about it b/c Apple's not required to report it to the SEC.
  • Reply 8 of 88

    Quote:

    Originally Posted by antkm1 View Post


    Can anyone explain what the possible ramifications of this could be?


    To me it says if he's relinquishing a large lump of his stock, he must see something coming up that might prompt him to leave.


     



     


    Normally you shouldn't read too much in to a stock sale.  Maybe he wants to buy something?


     


    But this is different,

  • Reply 9 of 88


    Most of these stocks sales have to do with dealing with the tax burden of the vested stock grants given to these officers as incentives. Nothing to see here, everybody chill.

  • Reply 10 of 88
    chris_cachris_ca Posts: 2,543member
    Selling stock is no big deal. Happens all the time.

    Clck on Insider Transactions on the left side
    http://finance.yahoo.com/q/it?s=AAPL
  • Reply 11 of 88
    island hermitisland hermit Posts: 6,217member


    It's a tax thing. If these shares matured (for lack of a better word) around AAPL's high and Forstall has already deferred tax gains from previous years, then he probably owes a whopping tax bill and doesn't want to take the chance of waiting for a better deal this year. Every $10 of share value decrease is $651,510 down the tubes that could be going towards taxes.


     


    Just my take... for what it's worth.


     


    [I see I was pipped by fecklesstechguy]

  • Reply 12 of 88
    jragostajragosta Posts: 10,473member

    Quote:

    Originally Posted by I am a Zither Zather Zuzz View Post


     


    Normally you shouldn't read too much in to a stock sale.  Maybe he wants to buy something?


     


    But this is different,



     


    Yes, it's different. He has to pay taxes.


     


    But that won't stop zzz from trying to use it to cast Apple in a bad light.

  • Reply 13 of 88
    obamaobama Posts: 62member


    He's selling now because he knows I'm coming after him for back taxes.  You can run Scott, but you can't hide!

  • Reply 14 of 88
    freshmakerfreshmaker Posts: 517member

    Quote:

    Originally Posted by Obama View Post


    He's selling now because he knows I'm coming after him for back taxes.  You can run Scott, but you can't hide!



    +1

  • Reply 15 of 88
    cvaldes1831cvaldes1831 Posts: 1,832member

    Quote:

    Originally Posted by antkm1 View Post


    Can anyone explain what the possible ramifications of this could be?


    To me it says if he's relinquishing a large lump of his stock, he must see something coming up that might prompt him to leave.


    Or, if this article rings true about him paying his taxes with the sold stock...that seems a bit odd that his accountant hasn't found some loophole around the tax code to allow him to keep what he had.


    With all this talk about corporate loopholes and tax shelters related to stocks and such, it seems odd that paying his taxes off with sold stocks would be a logical alternative.



    You shouldn't read too much into this. Once the RSUs were issued in March, he really didn't have a choice but to sell almost half of them to pay taxes due (likely 35% Federal income tax to the IRS and 9-10% to the California Franchise Tax Board). This wasn't an option grant where he could choose when/if to exercise the grant. The RSUs are issued shortly after the vesting date if all terms and conditions of the agreement are met (e.g., job performance).


     


    He could have kept the shares that he didn't sell in March, but the bulk of his holdings were probably still in AAPL, meaning poor portfolio diversification. You really do not want all of your eggs in one basket (ask former Enron employees) and Scott is probably smart enough to know it. All the AAPL senior execs are probably very familiar with Enron's fall, and some of them have left companies that had fallen precipitously (e.g., Mansfield left a crumbling SGI with all of his options underwater).


     


    By selling of the majority of the rest of his holdings, Forstall can invest in other companies, bonds, etc. He'll probably increase his holdings in alternative investments, ones that negatively correlate to the stock market.


     


    So why did he keep a few shares around? My guess is that he will hold them over a year so they can escape short-term capital gains tax. After that, they might be an "emergency fund" but more likely he would use them for charitable contributions. 


     


    In any case, corporate tax rates have nothing to do with individual income taxes. They are filed by different entities (a corporation versus an individual). Scott Forstall has to pay the taxman, just like Apple Inc. does. They have different tax situations, different deductions, and are governed by different tax laws.

  • Reply 16 of 88

    Quote:

    Originally Posted by Obama View Post


    He's selling now because he knows I'm coming after him for back taxes.  You can run Scott, but you can't hide!





    I believe that, unless Congress acts to change things, Capital Gains tax rates go from the current 15% to 35+% this coming January.  That's probably why we're seeing a lot of stock sales like Forstall's and it's not just in Apple.  Sales like this are more like a hedge bet on Congress doing what it's been doing for a long time which is nothing, rather than being based on some insider knowledge of what might happen to Apple.

  • Reply 17 of 88


    Worth every penny.  This guy has been in the iPhone trenches from day one.  Not an easy place to be with a volatile and passionate Steve Jobs.  Way to go, Scott!

  • Reply 18 of 88
    cvaldes1831cvaldes1831 Posts: 1,832member

    Quote:

    Originally Posted by bobinmurphy View Post




    I believe that, unless Congress acts to change things, Capital Gains tax rates go from the current 15% to 35+% this coming January.  That's probably why we're seeing a lot of stock sales like Forstall's and it's not just in Apple.  Sales like this are more like a hedge bet on Congress doing what it's been doing for a long time which is nothing, rather than being based on some insider knowledge of what might happen to Apple.



    You are misinformed.


     


    There are two capital gains tax rates: short-term (for investments held under a year) and long-term (over one year).


     


    The short-term capital gains tax rates always match the tax rate for income in the same tax bracket. Thus, if you are in the 28% tax bracket for income, you will be paying 28% short-term capital gains taxes.


     


    The current tax laws project an increase in the long-term capital gains tax rate from 15% to 20% (not 35+% as erroneously claimed above) for anyone above the 15% income tax bracket. 


     


    Be realistic: long-term capital gains tax rates will never exceed the income tax rate at that bracket. Otherwise, no one would want to invest for the long-term. The lack of long-term investment would likely destroy the world economy.


     


    Moreover, the tax brackets themselves will change a bit:


     


    http://en.wikipedia.org/wiki/Capital_gains_tax_in_the_United_States


     


    Forstall is probably in the 35% marginal tax bracket. Which makes sense why he had to sell off almost half of the RSUs when they were issued in March. He owned 35% income tax to the IRS plus another 9-10% to California's Franchise Tax Board.

  • Reply 19 of 88
    applegreenapplegreen Posts: 421member


    Better reporting by Cult of Mac.


     


     


    Scott Forstall, Apple’s Senior Vice President of iOS Software, has sold 65,151 shares of his Apple stock — the equivalent of 95% of his stake in the company — for a staggering $38.7 million. He now owns just 2,988 Apple shares, worth around $1.8 million, but if he sticks around, there’s plenty more where they came from.


    Forstall’s sale was revealed by documents filed with the U.S. Securities and Exchange commission last Friday. According to Fortunethe shares were the remains of a retention bonus of 120,000 shares that was paid to Forstall back in 2008.


    Although Forstall now owns just under 3,000 Apple shares, he’s due to receive a whole lot more over the next four years, should he stay with the company. In 2010, he was granted 100,000 restricted stock units that vest in 2014, and just last year, he was granted another 150,000 restricted stock units that will vest in equal parts in 2013 and 2016.


    If Apple’s stock reaches $1,000 per share within the next year, as some analysts have forecast, those shares could be worth a whopping quarter of a billion dollars (italics mine).


    On top of those RSUs, Forstall receives an annual salary of $700,000 for running Apple’s iOS software division.


    Why is he paid so much? Well, Apple’s iPhone and iPad, which both run the iOS operating system, made up $29 billion of the company’s $39 billion in sales last quarter. iOS is widely considered to be the best mobile operating system available. It’s no wonder Apple wants Forstall to stick around.


    _______________________________________


    So the guy sells stock worth $40 million.  He still has restricted stock worth about $150 million at current AAPL price.

  • Reply 20 of 88
    tallest skiltallest skil Posts: 43,399member

    Quote:

    Originally Posted by Derek Knight View Post

    Not an easy place to be with a volatile and passionate Steve Jobs.  Way to go, Scott!


     


    It is when you're much like Steve yourself.

Sign In or Register to comment.