Apple last week awarded new retail chief Angela Ahrendts stock grants that, if fully vested, would be worth as much as $78.5 million at Monday's closing price, filings with the U.S. Securities and Exchange Commission (SEC) showed.
Ahrendts, former CEO of the Burberry clothing company, was named Apple's new head of retail and online stores in October 2013, but did not begin her stint at Apple until May 1.
The biggest part of the 113,334 restricted stock units (RSUs) slated for Ahrendts -- 96,031 shares, or 85% of the total, worth $57.7 million at yesterday's closing price -- will vest over the next four years. The vesting is heavily front-loaded, with nearly $10 million to be handed to Ahrendts on June 1, with other large chunks shifting to her control in April-July 2015 and May-June 2016.
Like all such awards, Ahrendts must still be employed by Apple on a given vesting date to receive the designated RSUs.
Ahrendts' award was actually smaller than her predecessor's. When Apple hired John Browett, CEO of a struggling British electronics chain, in early 2012 to run its retail operation, the company gave him 100,000 RSUs. At the time they were issued, those shares had an on-paper worth of $58.7 million.
Browett was able to cash in on just 5,000 shares, as he was ousted later in 2012 during a reshuffle of Apple's top tier. The retail spot had been empty until Ahrendts' hiring.
Ahrendts will also receive a separate package of RSUs, totaling 17,303 shares, between 2015 and 2017. However, those grants were listed as "targets" that could be reduced to zero or, on the other end of the spectrum, as much as doubled, depending on Apple stock performance between May 1, 2014, and April 30 of 2015, 2016 and 2017.
How much Ahrendts receives will be based on "total shareholder return" (TSR), a combination of share price appreciation and dividends. If Apple outperforms the S&P 500 average in TSR, she will presumably receive the target RSUs, while an extraordinary performance could double the RSUs scheduled to vest that year. If Apple's TSR compares poorly, the RSUs will be reduced.
At the target number of RSUs, the TSR-tied compensation would be worth $10.4 million over the three years. If they were doubled, Ahrendts would pocket $20.8 million before taxes.
Ahrendts was hired, analysts said last year, to revitalize and revamp Apple's retail business, and to expand its footprint in Asia, where the company has booked record sales but has only a few brick-and-mortar stores. Apple has just 10 stores in China, for example, and only 20 spread between China, Hong Kong and Japan.
Her job will be crucial, said Ben Thompson, an independent analyst who operates the widely-read Stratechery website, because Apple's retail arm is critical to the company's success.
While Apple retail accounted for $5.2 billion of Apple's revenue in the March quarter -- 11% of the total for the period -- Thompson argued that Wall Street and industry analysts regularly undervalue the stores by tallying only sales.
In a Tuesday post on his site, Thompson said the stores give Apple significant advantages in selling its premium-priced products, even in the face of lower-cost alternatives, such as Samsung's Android-powered smartphones.
He pointed out three factors: The "try-before-you-buy" accessibility of Apple products in the stores, the in-store classes Apple conducts for customers to show them how to get the most out of their devices, and the free "Genius Bar" technical support.
"What is particularly compelling about each of these factors is that they work to Apple's advantage even if you don't buy your Apple product from an Apple Store," Thompson said. "You can try out a product there, then order it online. You can take a class with a second-hand device, and you can visit the Genius Bar no matter what. Thus, I don't think looking at direct Apple Store sales fully captures the impact they have on Apple's business."
Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer, on Google+ or subscribe to Gregg's RSS feed . His email address is firstname.lastname@example.org.