The Motley Fool readers have spoken, and I have heeded your cries. After months of pointing out CEO gaffes and faux pas, I've decided to make it a weekly tradition to also point out corporate leaders who are putting shareholder interests first and are generally deserving of a kudos from investors.
For this inaugural kickoff to "CEO Praise of the Week," I want to take a closer look at Apple
Kudos to you, Mr. Cook
Apple is a juggernaut that has enough cash in the bank to purchase nearly two-thirds of all publicly traded companies in the application software space. With more than $100 billion in cash, and paying a substantial $2.65 quarterly dividend to shareholders, Apple could arguably buy its own country. The company that the late Steve Jobs co-founded has vastly rewarded shareholders who have stuck with it over the years, and it's put its competitors so far in the rearview mirror that they're hardly even visible.
It therefore wouldn't come as a shock that Apple announced it was awarding dividends on restricted stock holdings for employees that won't vest for many, many years in most cases. It's a great tool to keep top talent from leaving Apple and a way to thank the employees for their hard work. Tim Cook, however, would have no part of it.
Cook, who has 1.125 million restricted stock units that vest in 2016 and 2021, filed paperwork with the SEC last week that he would not be receiving a dividend payment on these shares and would therefore forgo $75 million in dividend income on those shares.
This isn't to say Cook isn't a well-paid CEO because his pay package is largely tied to the performance of Apple's stock and he is considered one of the highest-compensated CEOs based on total compensation. But this is to say that Cook has done the little things that deserve kudos from investors even beyond this recent act of forgoing dividend payments on his restricted stock.
A step above his peers
For one, Cook is continuing a tradition begun by Steve Jobs in 1998 whereby he receives an annual salary of only $1. Instead, Cook relies on 1 million shares of Apple stock he was given upon taking the helm of Apple to drive his compensation. Who would have thought that giving management a vested interest in the company and control over their own compensation through those holdings would derive strong results that coincided with shareholder interests?
Now compare this with the self-serving interests of some of Apple's peers.
Research In Motion
Then there was the former CEO of Hewlett-Packard
Secondly, under the leadership of Cook, Apple introduced its $2.65 quarterly dividend. The talk of a dividend had been on the horizon for some time, but Cook actually made it happen. Since Cook and many executives own plenty of Apple stock, if they're interested in finding ways to increase their pay, they can simply bump up the dividend, giving themselves and shareholders a raise in the process.
This is similar to how Steve Ballmer, CEO of Microsoft
Two thumbs up
It's not often that shareholder interests and management's wallets are perfectly aligned; but that's exactly what you get with Tim Cook and Apple. My sincere two thumbs up to you, sir!
Do you have a CEO you'd like to nominate for this prestigious weekly honor? Shoot me an email and a one- or two-sentence description of why your choice deserves next week's nomination, and you just may see your nominee in the spotlight.
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Fool contributor Sean Williams has no material interest in any companies mentioned in this article. He loves giving credit when credit is due. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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