Inside Apple’s massive rewards program for shareholders

“Apple has one of the biggest cash hoards in history, yet it has borrowed $35 billion in the past year and a half,” Peter Coy reports for Businessweek. “Strange, no? Why does a company as rich as Apple need to ask other people for money?”

“Most of Apple’s cash is overseas, where it can’t easily be gotten at. And the world’s most valuable company is giving mountains of money to its shareholders—$130 billion over two and a half years,” Coy reports. “Apple Chief Executive Officer Tim Cook told analysts in April that the size and pace of its ‘capital-return program’ is ‘unprecedented.'”

“Only 12 percent of its cash is held in the U.S. And as Chief Financial Officer Luca Maestri told analysts in April, ‘To repatriate our foreign cash under current U.S. tax law, we would incur significant cash tax consequences, and we don’t believe this would be in the best interest of our shareholders,'” Coy reports. “That’s one reason cash-rich Apple is borrowing money. The other reason, of course, is that borrowing is supercheap for Apple. Interest rates on its debt range from 0.45 percent for three-year debt to 4.45 percent for 30-year obligations.”

Read more in the full article here.

8 Comments

    1. Thankfully, it sounds like you are on the case. Your use of selectively capitalized words assures me that the rest of us can all rest easy now. On behalf of the American public, thank you.

  1. Not one of the elected officials in the US have the balls to change the tax code. Special interests control the politicians and every part of the tax code provides some benefit to one group or another.
    It would take someone who is wiling to sacrifice their career to rewrite the code. But the rest of the congress would make sure the bill would never reach the floor.

  2. Borrowing money to distribute as dividends and repaying it form overseas stashed cash sounds like tax evasion to me. Something that would get an ordinary Joe or Jane locked up.

    We need tax reform but seriously doubt we will get the reforms we need. Politicians gather huge contributions by carving out holes and exemptions to tax policy and regulatory policy and it is not in their interest to make them less complicated or more common sense.

    1. It sounds like tax evasion to you because you are ignorant of the law. Tax evasion, in the criminal context in which you put it, means doing something illegal to hide money from legitimate taxes. Apple is doing nothing illegal. It is doing what the US tax code, the only one in a developed country that taxes repatriated overseas earnings, creates incentives to do and in fact forces companies to do, because of their fiduciary duty to shareholders. If Apple didn’t do that, they could conceivable face a shareholder class action suit.

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