“By coincidence or design, Tim Cook was scheduled to receive a boatload of Apple stock the same day he stopped a market rout,” Philip Elmer-DeWitt reports for Fortune.
“In August 2011, when Tim Cook was tapped to replace the ailing Steve Jobs, Apple’s board of directors awarded him 1 million restricted stock units (RSUs), half to vest in five years, the rest in 10. At the time they were awarded, the shares were worth $323 million.,” P.E.D. reports. “At Cook’s request, the terms under which those shares are distributed were changed two years later; the shares now vest on a yearly basis, according to a complicated formula that includes an incentive tied to the company’s performance.”
“Were Cook’s 280,000 RSUs ever at risk?” P.E.D. asks. “Was Tim Cook aware when he sent that note to Cramer that 280,000 of his restricted shares were scheduled to vest that day by a formula that might, in theory, have reduced the value of his holdings by some $14.4 million? I gave Apple PR several chances to answer that one. So far, they’ve declined.”
Read more in the full article here.
MacDailyNews Take: Tim’s email opened quite the can of worms!
SEE ALSO:
Let Apple CEO Tim Cook speak (about business) – August 26, 2015
SEC to sanction Apple CEO Cook for his $63 billion email? – August 24, 2015
Apple shares recover from white-knuckle plunge after CEO Cook emails Jim Cramer – August 24, 2015
Apple CEO Cook may have violated U.S. SEC rules with email to Jim Cramer – August 24, 2015
CEO Tim Cook to Jim Cramer: Apple is seeing strong growth in China through July, August – August 24, 2015
Lonely at the top.
Since he’s planning to give his money away, among other things, I have doubts he had any motive other than correcting the record about how they’re doing in China. I’ve not seen anything to indicate he is shady in his dealings in any way.
Like if Tim was struggling in day to day life and needed money desperatly. Tim doesn’t realize yet how powerful he has become…
BTW, Tim lives in a mansion that is well known to be a normal regular house… No castle, no palace, a regular house…
Apple currently buying back stock as planned………a mid quarter report on China raised the stock price going AGAINST the buy back interests of Apple…..
Yes I’m sure they will be leading TC away in handcuffs any day now…………/s (for the samdung users)
That’s a good point.
For buy & hold investors like all of us (and presumably Cook), a lower share price is better than a higher share price.
280,000 shares is 280,000 shares. Unless he’s selling them, their value on any given day is kind of irrelevant. (I suppose he might have to immediately sell some to off-set the taxes, in that case it helps if they’re higher.)
In any case his disclosure (to the mass media) was a triumph of real-world facts over wild speculation and rumour.
The business world should be celebrating it.
In any event, the issue is irrelevant unless AAPL had to have a certain value on the date the shares were to be issued, which is almost never the case.
In addition, most often these executive stock bonuses also carry restrictions on selling the shares, often in years, so the value of the shares on the date of issuance is virtually meaningless. The issuance is an incentive for the executive to remain with the company and to incentivize the executive to continue to build the company’s value and performance, thus increasing his own compensation because his stock will have increased in value by the time he is permitted to sell it.
I am not a Tim Cook fan, but in this case I believe he was trying to do his best to support the shareholders in the company and also to inject some actual truth into a market that is dominated by very large shady financial entities that profit from massive swings in the stock price that are caused by lies spread by sundry corrupt sources.
Agreed. Because Apple is such a secretive company, wild and rampant speculation occurs regarding its performance. Cook didn’t give Cramer any numbers, just reassurances to a very popular and widely followed member of the media that Apple is selling very well in China, the opposite of what the rumors were stating.
IOW, all Cook did was come out to Cramer (a financial news reporter with his own show) and correct the record.
Violating the law generally results in prosecution regardless the intention otherwise the law is reduced to personal opinion.
Unless he planned on selling the shares immediately this question doesn’t even need to be asked. Not sure how the transaction process works, but raising Apple’s share price with his email could have cost Apple more since they might have to purchase them on his behalf? Not sure how that works though.
Ooops. Where are all the TC fanboys now? Even MDN is now acknowledging that what TC did was wrong and likely broke SEC rules.
TC fan right here. And MDN doesn’t know squat about SEC rules, and neither do you. I’m sure Tim Cook consulted with Apple legal before sending any email, and I seriously doubt it caused any violation of SEC rules. Even if it did, it was the right thing to do: The negative and apparently false rumors of Apple performing poorly in China needed to be corrected, not just for Apple’s sake but for the market’s sake. People were making buy/sell decisions based on false and untrue rumors.
Cook did the right thing, now whether he violated an SEC rule remains to be seen. In reality, all he did was communicate with a member of the financial press to correct false rumors about Apple without giving any specific numbers. How is that different from Steve Jobs calling up Walt Mossberg and talking to him about Apple’s performance?
If Tim Cook violated SEC rules and regulations he has no excuse.
If Apple’s lawyers gave their blessing they are stupid, incompetent, or both. I don’t know if Cook benefited financially from his emails; however, I suspect that Cook’s emails could be interpreted as an intention to avoid further financial loss.
” . . .however, I suspect that Cook’s emails could be interpreted as an intention to avoid further financial loss.”
The value of AAPL would have only peripheral effect on Apple Inc. Apple is not currently issuing any stock to raise capital so it cannot gain by selling into the market, so the price of the stock is only theoretically of interest to the management of Apple. It is of tertiary importance to top management to keep the stockholders happy by keeping AAPL stock value up, but it has little effect on the day-to-day management of Apple. Once the stock is on the open market, Apple itself has little to do with it except report to the holders what Apple is doing. Tim Cook did what he was expected to do by making a generally vague non-detailed answer to a video journalist in reply to a request for information with the intent of getting the information out to counter a lot of FUD disinformation that was being spread.
Cook should have been more circumspect. Cook needs to behave with more discretion as CEO.
No, CEOs need to keep the information that provides the information correct which counters the misinformation the FUD spreaders have been using to drive their company’s stock down. They have no obligation to keep anything secret that can be found out with ordinary investigation.
At the end of the article, PED has added that the whole article was based on a tweet that the author now admits was ridiculously incorrect. Yet he didn’t change the nasty innuendo in the headline.
Until I see anything of substance coming from the SEC, I cannot see what this tempest in a teapot is except normal FUD from the usual suspects. So far, the SEC has been silent.
this makes NO sense at all. the only way he could benefit is if he sold some of the shares when they vested, but he didn’t. in addition, the company is required to record the vesting at today’s market price and tax Cook as ordinary income. From this point on, any gains he has will be capital gains. He will now have to pay more tax because of the higher price of the stock so he is really hurt by the disclosure, not helped. I don’t get it.
Yes, he broke disclosure rules, but I can’t see it as anything more than a slap on the wrist. No one benefited from the disclosure, and public broadcast of the information was made before the market even opened.