“If Apple continues to underperform for the next eight months, CEO Tim Cook stands to lose quit a bit,” Evan Niu writes for The Motley Fool.
“In 2013, Cook voluntarily chose to modify the massive grant of restricted stock units that he received in 2011 upon becoming CEO,” Niu writes. “He received 1 million RSU shares under the 2011 award, and these were initially only time-based awards that would continue to vest as long as Cook stayed with the company. The modification effectively converted a large portion of these shares to performance-based awards where tranches would only vest if Apple met certain criteria.”
“This modification only has the potential to be negative for Cook, and there was no upside possibility to the change for his compensation. Cook & Co. felt that it was the right thing to do to enhance corporate governance, and Cook asked the board that his 2011 award and all future equity awards be subjected to performance criteria,” Niu writes. “Apple decided that the most relevant performance metric would be total shareholder return, or TSR, which includes reinvested dividends. But Apple’s TSR must outperform comparable other companies for certain measurement periods for each related tranche to vest. If Apple performs within the top third, 100% of the tranche vests. If Apple performs within the middle third, 50% of the tranche vests. If Apple performs within the bottom third, 0% of the tranche vests.”
Read more in the full article here.
MacDailyNews Take: Whatever impetus there is for a man who’d already fabulously rich, let’s hope there’s enough of it for Apple Inc. to somehow mange to make things that they should already have on the market, like an Apple 4K (or even a 5K) monitor, for just one glaring example.
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Apple CEO Tim Cook declines RSU dividends worth in excess of $75 million – May 24, 2012