Apple execs now required to hold triple their salary in stock

Posted:
in General Discussion edited January 2014
Apple earlier this month implemented a new corporate governance stipulation that requires top executives to hold company stock worth at least triple their base salary.

Proxy 2013


The discovery of the new rule, as reported by The Wall Street Journal, comes one day after Apple held its annual shareholders meeting, where similar changes to corporate governance measures relating to executive stock holdings were up for vote.

According to a notice on Apple's investors webpage, the requirement took effect on Feb. 6, roughly one month after the company first issued its definitive proxy statement.

Interestingly, the policy is somewhat contrary to a similar proxy proposal that shareholders voted against on Wednesday. Apple's board urged a vote against Proposition 5, titled "Shareholder Proposal Entitled Executives to Retain Significant Stock," which recommend executives retain 33 percent of their stock holdings until retirement.

Apple's implementation of the executive stock holding policy comes amidst growing pressure from shareholders concerned over the company's decining stock price, which has slipped over 36 percent since hitting a high of just over $700 in September 2012. AAPL closed at 441.40 on Thursday after shedding $3.17, or 0.71 percent, from its price at the opening bell.
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Comments

  • Reply 1 of 30


    Interesting.  Should be pretty easy for Cook to meet this - he only makes $1 per year in base salary right?  image

  • Reply 2 of 30


    I find this difficult to follow. So, an employee will have to run out and buy more stock if the price falls? Obversely, if the stock up by more than 300% in aggregate value of base pay, won't they have an incentive to sell? Wouldn't such insider buys and sells simply roil the stock even more!?


     


    And what about the fact that an average employee has no direct control over what the market does with Apple's stock? They control the cash flows from Apple -- if that -- but they have very little to do with determining the market's perception of Apple's risk, its mood swings, momentum-based trades, high-frequency trades, etc.


     


    This policy makes makes no sense at all. Need more information, AI.....

  • Reply 3 of 30
    I find this difficult to follow. So, an employee will have to run out and buy more stock if the price falls? Obversely, if the stock up by more than 300% in aggregate value of base pay, won't they have an incentive to sell? Wouldn't such insider buys and sells simply roil the stock even more!?

    And what about the fact that an average employee has no direct control over what the market does?

    This policy makes makes no sense at all. Need more information, AI.....

    I read it as top execs only. But to your point, it's still ridiculous to me as well.
  • Reply 4 of 30
    poochpooch Posts: 768member
    I find this difficult to follow. So, an employee will have to run out and buy more stock if the price falls? Obversely, if the stock up by more than 300% in aggregate value of base pay, won't they have an incentive to sell? Wouldn't such insider buys and sells simply roil the stock even more!?

    And what about the fact that an average employee has no direct control over what the market does?

    This policy makes makes no sense at all. Need more information, AI.....
    ... top executives ...
  • Reply 5 of 30
    I find this difficult to follow. So, an employee will have to run out and buy more stock if the price falls? Obversely, if the stock up by more than 300% in aggregate value of base pay, won't they have an incentive to sell? Wouldn't such insider buys and sells simply roil the stock even more!?

    And what about the fact that an average employee has no direct control over what the market does with Apple's stock? They control the cash flows from Apple -- if that -- but they have very little to do with determining the market's perception of Apple's risk, its mood swings, momentum-based trades, high-frequency trades, etc.

    This policy makes makes no sense at all. Need more information, AI.....

    As I understand it, it only applies to the execs, not the blue coloured employees.
  • Reply 6 of 30

    Quote:

    Originally Posted by allenbf View Post



    I read it as top execs only. But to your point, it's still ridiculous to me as well.


    Top execs also have only limited control over the share price. Again, while they can manage earnings and cash flows, they have no control over the market's mood swings (I edited my original post to reflect this clarification at about the same time you were perhaps typing your response).


     


    Perhaps it simply means that annual stock grants will be set at at least 3x the base pay, based on stock price at the time of grant.

  • Reply 7 of 30


    This is a common corporate governance practice.  It ensures that senior leaders keep shareholders in mind as they make strategic and tactical decisions.  Usually, this stock has to come from personal holdings and does not count employee stock options that have come through the company's long-term incentive programs.

  • Reply 8 of 30

    Quote:

    Originally Posted by PhilBoogie View Post



    As I understand it, it only applies to the execs, not the blue coloured (collared image?) employees.


     


    Quote:

    Originally Posted by Pooch View Post



    Originally Posted by AppleInsider View Post



    ... top executives ...




    See #7 above.

  • Reply 9 of 30
    mj webmj web Posts: 918member
    Tim Cook is an incompetent CEO who needs to be replaced before any more damage is done to AAPL. In one year he has destroyed two decades of Steve Job's legacy. Cook makes Steve Balmer look like a Warren Buffet. Time to sack his skinny butt or at least replace him as CEO ASAP!
  • Reply 10 of 30
    rogifanrogifan Posts: 10,669member


    Wonder if this requirement includes Jony Ive who's an SVP but for whatever reason isn't listed as an executive officer with the SEC. Always wondered why he isn't but all the other SVP's are.  I'm assuming his salary and stock options are the same as everyone else's?

  • Reply 11 of 30
    john.bjohn.b Posts: 2,740member


    I once worked for a company that required employees to hold a certain percentage of their annual salary in company stock, with the exact percentage dependent on pay grade.  For any employee below the threshold, any and all bonuses/awards were made as restricted stock grants.  It's pretty much the opposite of diversification, and I'm surprised to see any company still doing this in the wake of the WorldCom and Enron debacles.

  • Reply 12 of 30
    jungmarkjungmark Posts: 6,917member

    Quote:

    Originally Posted by MJ Web View Post



    Tim Cook is an incompetent CEO who needs to be replaced before any more damage is done to AAPL. In one year he has destroyed two decades of Steve Job's legacy. Cook makes Steve Balmer look like a Warren Buffet. Time to sack his skinny butt or at least replace him as CEO ASAP!




    That one year is the most profitable year in corporate history. Such a failure. 1/1/2012, stock price was 422. Today, stock closed at 441. That's a decline...wait a sec. stock price on 8/26/2011 was 383. Again, we see a decline. wtf, why doesn't the facts support my narrative! /s

  • Reply 13 of 30
    mj web wrote: »
    Tim Cook is an incompetent CEO who needs to be replaced before any more damage is done to AAPL. In one year he has destroyed two decades of Steve Job's legacy. Cook makes Steve Balmer look like a Warren Buffet. Time to sack his skinny butt or at least replace him as CEO ASAP!

    What arrant nonsense.
  • Reply 14 of 30

    Quote:

    Originally Posted by MJ Web View Post



    Tim Cook is an incompetent CEO who needs to be replaced before any more damage is done to AAPL. In one year he has destroyed two decades of Steve Job's legacy. Cook makes Steve Balmer look like a Warren Buffet. Time to sack his skinny butt or at least replace him as CEO ASAP!


     


    That's right, don't let silly facts like the last quarter being the company's most profitable ever get in the way. When the stock was at $700, were you singing that song then?

  • Reply 15 of 30
    jragostajragosta Posts: 10,473member
    Top execs also have only limited control over the share price. Again, while they can manage earnings and cash flows, they have no control over the market's mood swings (I edited my original post to reflect this clarification at about the same time you were perhaps typing your response).

    Perhaps it simply means that annual stock grants will be set at at least 3x the base pay, based on stock price at the time of grant.

    No, I can't imagine that the stock grant would be 3x the annual salary each year.

    This is quite common for executives in public companies. Rarely do they have to buy all that stock at once. Rather, they usually have several years to accumulate the stock. And with the generous stock grants that Apple has, it shouldn't be that hard to accumulate 3 years worth of stock.

    BTW, another thing that many companies do is provide the option for the employee to sign a note to pay for the stock, as well.
  • Reply 16 of 30
    slurpyslurpy Posts: 5,346member
    mj web wrote: »
    Tim Cook is an incompetent CEO who needs to be replaced before any more damage is done to AAPL. In one year he has destroyed two decades of Steve Job's legacy. Cook makes Steve Balmer look like a Warren Buffet. Time to sack his skinny butt or at least replace him as CEO ASAP!

    Oh, please shut the **** up.
  • Reply 17 of 30


    Originally Posted by MJ Web View Post

    Tim Cook is an incompetent CEO who needs to be replaced before any more damage is done to AAPL. In one year he has destroyed two decades of Steve Job's legacy. Cook makes Steve Balmer look like a Warren Buffet. Time to sack his skinny butt or at least replace him as CEO ASAP!


     


    Where's the forum "This person has been discredited" button…

  • Reply 18 of 30


    All the impacted pepple are given at least 66 million dollars in stock (150K shares) every couple of years.  Why do you think 2 billion dollars a year only holds off dilution and doesnt decrease it?  Man if the people posting here really own stock they should sell immediately because this information isnt hard to find.  Plus it doesnt kick in until 2016 anyway so look for these execs to sell as fast as they can and use the buyback program to support the share price.  99% of the time when the execs are selling so should you.

  • Reply 19 of 30
    chris_cachris_ca Posts: 2,543member

    Quote:

    Originally Posted by Freshmaker View Post


    Interesting.  Should be pretty easy for Cook to meet this - he only makes $1 per year in base salary right?  image



    No.

  • Reply 20 of 30

    Quote:

    Originally Posted by MJ Web View Post



    Tim Cook is an incompetent CEO who needs to be replaced before any more damage is done to AAPL. In one year he has destroyed two decades of Steve Job's legacy. Cook makes Steve Balmer look like a Warren Buffet. Time to sack his skinny butt or at least replace him as CEO ASAP!


     


    You either forgot to do the "/s" for sarcasm, or you don't know what you're talking about.

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