Apple hands over $57M to CEO after stellar S&P performance

Tim Cook gets full allotment of vested shares after Apple places No. 44 in 'total shareholder return'

Apple CEO Tim Cook was handed more than half a million shares two weeks ago as part of a long-standing compensation plan, receiving the full amount of the stock due him because of Apple's performance on Wall Street.

Apple withheld 290,834 shares -- slightly more than half of the 560,000 total -- for tax purposes.

The shares were this year's annual allotment under a revised schedule designed at Cook's request. In June 2013, Apple's board modified the vesting plan, which originally had set two large stock handouts for the massive 1 million share grant -- after this year's stock split, equal to 7 million -- in 2011 when Cook assumed the chief executive's role shortly before co-founder Steve Jobs' death.

Under the 2013 plan, Cook's shares were to vest in equal amounts -- 80,000 shares pre-split, 560,000 after the 7-to-1 split -- and the amount was to be partially tired to the company's performance on Wall Street.

The criteria Apple set was "total shareholder return" (TSR), a combination of share price appreciation and dividends. If in any 12-month period, Apple was within the top third of the S&P 500 in TSR, Cook was to receive all the RSUs (restricted stock units) slated to vest that year. However, if Apple's TSR was in the middle or bottom third, he was to receive only three-fourths or one-half, respectively, of the at-risk RSUs.

For the year Aug. 25, 2013, to Aug. 24, 2014, Apple's TSR was 46%, easily in the top third, the company said in a filing with the U.S. Securities and Exchange Commission (SEC).

"[Apple's performance] ranked 44th of the 480 companies that were included in the S&P 500 for the entire period (91st percentile)," Apple said. "Therefore, all 280,000 of the restricted stock units subject to performance requirements vested."

The 560,000 vested shares were worth $56.7 million at the Aug. 22 closing price of $101.32; the amount Apple withheld for tax purposes was valued at $29.5 million. No shares were actually sold, however.

"In addition, because Mr. Cook's marginal tax rate in California is higher than the minimum statutory tax withholding rate, he is submitting a tax payment in addition to the withholding applied by Apple," Apple stated in the filing with the SEC.

Since Aug. 24, Apple's share price has drooped; as of 1 p.m. ET, the stock was at $98.93, down 2.4% since Cook received his 2014 allotment.

Cook still has 5,320,000 RSUs coming to him, with a pair of "balloon payments" of 700,000 due on Aug. 24, 2016, and Aug. 24, 2021, assuming he is still with the company on those dates. "The balance of 3,920,000 restricted stock units vests in seven equal annual installments commencing August 24, 2015, assuming continued employment through the applicable vesting date and, with respect to a portion of each annual installment, satisfaction of the applicable performance requirements," Apple said.

In 2013, Apple stripped Cook of approximately $4 million worth of stock because of the company's subpar TSR.


Copyright © 2014 IDG Communications, Inc.

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