Apple Tightens Its Golden Handcuffshttp://www.fool.com/investing/general/2013/03/01/apple-tightens-its-golden-handcuffs.aspx Evan Niu, CFA, CFA
March 1, 2013
Despite Apple's (NASDAQ: AAPL) uneventful annual shareholder meeting last Wednesday, the company has made some changes to its corporate bylaws (link opens PDF).
Leading up to the meeting, Greenlight Capital's David Einhorn scored a victory in his suit against Apple, whereby Apple could not bundle three separate matters into one single vote. Apple had proposed some changes that it felt were in the best interests of shareholders and corporate governance advocates, but Einhorn wasn't keen on the provision on preferreds. Apple had to remove the vote just days before the meeting.
As it turns out, Apple had actually decided to change its mind on another proposed measure, quietly instituting a change at the beginning of February that was just now noticed. Apple is tightening its golden handcuffs on executives.
These are the ownership requirements now being implemented on employees and directors.
Qualifying ownership includes any shares that these individuals own directly, own jointly or separately by a spouse, or hold in a trust. Equity awards only count once they're vested, so that 1 million restricted stock unit grant that Tim Cook received upon becoming CEO won't count quite yet.
The company expects these requirements to be satisfied for Cook and the board by November 2017, and other executives have until February 2018. Any new executive that becomes subject to the requirements has five years to meet the compliance requirement.
Here are the salaries and retainers and related requirements for 2013.
Cook's most recent Form 4 shows that he owns 13,858 shares directly, which is worth just under $6 million at current prices. However, remember that Cook was holding over 1.1 million restricted stock units, or RSUs, as of the proxy date. He became CEO in 2011 and he will have 500,000 shares vest in 2016. Once that happens, that ownership requirement will look like a drop in the bucket. At current prices, half a million shares are worth $216 million. The only way that those shares vesting will fail to meet his holding requirement is if Apple declines by 96% over the next three years, so I think he's safe.
CFO Peter Oppenheimer is currently the proud owner of 4,834 shares, valued at $2.1 million, so he's not too f