“Back in the summer of 2013, facing a modest shareholder revolt, Apple CEO Tim Cook did one of the more remarkable things I’ve seen in years of writing about corporate compensation: He volunteered to rewrite the rules for the restricted stocks units he had already been granted,” Chris O’Brien reports for VentureBeat.
“He was under no obligation to do so. But shareholders had seen the company’s stock cut almost in half over the past year and were getting nervous,” O’Brien reports. “Cook, along with Apple’s board and executive team, wanted to make a defiant statement about their strong belief in the company’s future.”
“So the board decided to change the rules about vesting for restricted stock units by tying them even more closely to the company’s performance. While the rules were written for new RSUs, Cook asked to have them applied retroactively to the massive stock award he had received when he became CEO in August 2011,” O’Brien reports. “The company’s latest proxy filing yesterday… reveals that Cook is facing enormous downside this year, for a couple of reasons.”
Read more in the full article here.
MacDailyNews Take: Execution, focus on quality, and attention to detail cures all ills.
SEE ALSO:
Technical analyst: Apple may plummet another 29% – January 7, 2016
Apple stock price tumbles 3% in premarket, now trades well below $100 – January 7, 2016
Apple stock slumps near $100 amid ‘iPhone sales worries’ – January 6, 2016
Wall Street’s freak out over declining iPhone sales is overblown – January 6, 2016
Piper Jaffray: Apple’s iPhone production cut do not necessarily presage sales decline – January 6, 2016
Foxconn plans ‘rare’ holiday as iPhone output fears rattle investors – January 6, 2016
Apple to release Q116 earnings, webcast live conference call on January 26th – January 5, 2016
Apple CEO Tim Cook declines RSU dividends worth in excess of $75 million – May 24, 2012
Company financial fundamentals are a waste of time for shareholders to use as an investment decision. Apple’s value foundation appears to be made of beach sand. There are so many companies with far worse fundamentals that are weathering this market decline much better than Apple is. I guess Wall Street really has it in for Tim Cook. Well, at least I’m getting my Apple dividends as a consolation prize and at least Apple employees aren’t losing their jobs which is definitely a good thing.
I don’t think there’s really much evidence that “Wall Street” (I assume you mean brokerage houses and investment banks) has it in for Tim Cook. What they have found is that they can get AAPL to bounce around like a bouy (to use MDN’s analogy), and so they do. Any stock they can get to move in one way or another makes money for the investment banks. That’s all they care about.
Exactly, I think these folks make a lot of noise about how volatile Apple is for show and for the news, but behind closed doors they are jumping for joy with their high frequency trading computers. The more bounce a stock has, the more the rich like Apple, and the more snicker behind their sleeves at all of us up in arms.
The whole concept of incentive compensation which uses share price to align company management with shareholder interests is completely broken because the stock market has become nothing but Las Vegas without the shows and restaurants.
You would think that a multi-year string of record sales and profits would be in the interests of shareholders, the largest of which are institutional investors and funds. However, Apple is instead being punished for not spending every cent of free cash flow like Amazon does in the name of “top line growth”. I own and run a business. As the only shareholder, I can tell you that my #1 priority is maximizing my PROFITS.
My MBA seems to be way out of date because, back in the day, we were taught that the whole point of being in a for-profit business was to maximize profit.
Quite honestly I have always been a supporter of Tim Cook because I really do think he is really great at running Apple in the best way possible and in a way that is best for the products and the business. However, that doesn’t seem to mean jack s**t to wall street.
I am also getting increasingly angry every time I see another analyst or fund manager on CNBC. Yesterday’s 5 minute bashing of AAPL was ne of the worst yet. For years wall street said that Apple was undervalued because they weren’t returning enough cash to shareholders. Now that they are buying back stock and paying dividends, wall street doesn’t like the debt Apple is taking on in order to pay those dividends. They also are now complaining (like the multiple Jim Cramer speeches this past week) that Apple has to go out and spend billions on acquisitions.
I honestly believe that the second Apple announces a big acquisition, the share price will go down further, with wall street complaining about something (paid too high a price, questionable fit, integration concerns, etc.). These people really don’t know WTF they actually want and there probably won’t be anything that will make them happy.
They want to make the stock move. That’s all they want. They don’t care which way it goes. When it goes down, they pile on. When it goes up, they cheer. Which ever way the stock is moving, they do everything they can to make it move as much as possible. They make their money when the stock is volatile. If it shows steady movement in any direction, they don’t make as much money.
I agree in theory. However, I really don’t understand why their default choice is to bash Apple and spread FUD, while you never hear one word of criticism for Amazon, who will not make enough profits in our lifetimes to repay the capital that has been invested.
For the record, as of 2014, the ROIC (the aftertax return on invested capital, about the most basic measure of business productivity) was 1.17% for Amazon and 141.93% for Apple.
A return of 1.17% is only acceptable for a company in the tech space if you are still willing to consider them a startup that is burning cash. Are they still entitled to startup status after 21 years in business? Who cares how much of Wal Mart’s and Target’s business they are taking, considering the low profit margins involved. As for web services (the only part of the business that is actually solidly profitable), I don’t think they are doing anything that other tech companies such as HP and IBM that are looking for revenue can’t replicate, driving down margins there as well.
I told you that paying those executives minimum wage would be a problem.