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Apple Paying Dividends to Employees with Restricted Stock Units, CEO Tim Cook Declines to Participate

Thursday May 24, 2012 2:26 pm PDT by Jordan Golson
152516 apple logoApple's board has decided to award dividend equivalent payments to employees holding restricted stock units or RSUs. Apple announced a quarterly dividend of $2.65/share in March, to commence in July. RSUs are typically issued to employees to encourage them to stay with the company. They are awarded in a similar way to stock options, but convert directly into shares of stock upon vesting.

Apple CEO Tim Cook was awarded 1 million RSUs upon his promotion to CEO last year to entice him to stay with the company for the foreseeable future. Half of the shares vest in 5 years, and the other half in 10. Cook has specifically declined the dividend equivalents, turning down more than $75 million in dividend payments over the life of the RSUs.

From an Apple SEC filing today:
On May 24, 2012, the Compensation Committee (the "Committee") of the Board of Directors of Apple Inc. (the "Company") approved amendments to each outstanding and unvested restricted stock unit award granted by the Company to its employees (other than Timothy D. Cook, the Company's Chief Executive Officer). The amendments provide that if the Company pays an ordinary cash dividend on its common stock, each award will be credited with an amount equal to the per-share cash dividend paid by the Company, multiplied by the total number of restricted stock units subject to the award that are outstanding immediately prior to the record date for such dividend. The amounts that are credited to each award are referred to as "dividend equivalents." Any dividend equivalents credited to an award will be subject to the same vesting, payment and other terms and conditions as the unvested restricted stock units to which the dividend equivalents relate. Depending on the domicile of the employee, accumulated dividend equivalents will either be paid in cash or used to offset employee taxes due upon vesting of the restricted stock units.

The Committee determined these amendments were appropriate in light of the Company's announcement on March 19, 2012 that it intends to commence paying ordinary cash dividends of $2.65 per share to its shareholders on a quarterly basis sometime during the fourth quarter of its 2012 fiscal year. As restricted stock units are not outstanding shares of common stock and thus would not otherwise be entitled to participate in such dividends, the crediting of dividend equivalents is intended to preserve the equity-based incentives intended by the Company when the awards were granted and to treat the award holders consistently with shareholders.

At Mr. Cook's request, none of his restricted stock units will participate in dividend equivalents. Assuming a quarterly dividend of $2.65 per share over the vesting periods of his 1.125 million outstanding restricted stock units, Mr. Cook will forego approximately $75 million in dividend equivalent value.


Tag: Tim Cook
[ 102 comments ]

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Shrink
97 months ago
Impressive on Cook's part.

It must be nice to be able to turn down $75 million.

Nevertheless...pretty classy.
Rating: 28 Votes
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futbalguy
97 months ago
That is a lot of money to turn down. Wow.
Rating: 21 Votes
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JUiCEJamie
97 months ago
Very very admirable! Mr Cook is doing a great job as CEO. He's doing a lot of things differently to his predecessor too! I like it a lot!
Rating: 20 Votes
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CalfCanuck
97 months ago
He can still look himself in the mirror now!

That is a lot of money to turn down. Wow.


He is putting a lot of new policies for Apple employees into place, and he does not want it to appear to benefit from them himself.

He knows that he was awarded a BUCKET of shares recently - more than he'll ever need. So why risk polluting his broader goals for the company with personal issues?
Rating: 17 Votes
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guspasho
97 months ago

Notable. Now lets see the "99%" folks try to spin that badly.


What in the world does one have to do with the other?
Rating: 11 Votes
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srxtr
97 months ago
Can I get some of that money? I promise I'll use all of it to buy Apple products only
Rating: 9 Votes
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TMay
97 months ago

Very very admirable! Mr Cook is doing a great job as CEO. He's doing a lot of things differently to his predecessor too! I like it a lot!


Steve Jobs worked for $1 a year for (at least) most of his tenure with perks like a Gulfstream V. I'm sure that someone here knows the details without a specific search, but to me it gives context to how much Apple meant to him and his legacy.

BTW, almost all of Steve's wealth is from the sale of Pixar to Disney for stock, at the time some $7 Billion, and he and his family lived a relatively modest lifestyle for a billionaire.

I'm always surprised when people make quite despicable comments based on his first tenure at Apple, not accounting for his maturation at Next and Pixar, and certainly not at his second tenure at Apple.

http://www.redmondpie.com/steve-jobs-annual-salary-at-apple-1997-2011-was-less-than-yours/
Rating: 8 Votes
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jlgolson
97 months ago

I'm sure Mr. Cook turned it down to avoid any conflict of interests. Being CEO could do that.

The Board of Directors declared the dividend. It could be seen as insider manipulation.

What are you talking about?

This was decided by the Compensation Committee, of which Cook is not a member. Campbell, Drexler, Gore and Jung sit on it.
Rating: 7 Votes
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jlgolson
97 months ago
He's actually turning down a lot more than $75 million. There is a near-zero chance that the dividend doesn't get increased at some point in the next 10 years.
Rating: 7 Votes
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feeze
97 months ago

when would Apple start rewarding its employees all around the world for working their ass off ???

salespersons, geniuses and all the guys who stand from early in the morning until late every evening to sell and repair all Apple products for minimum to average wages...

the company makes billions, regular employees get peanuts

oh yeah, a few discounts per year... money that goes back to Apple's pocket


What a bunch of self-entitled clap trap.

Retail employees get paid a wage, do they not? They are given adequate renumeration for their level of qualifications and amount of work they do, are they not?

The employees who are given stock options are given so as part of their renumeration It's a package they negotiated upon employment with the company. They negotiated the packages because they have a skill set and qualifications that make them valuable enough to be in a position of negotiation.

Don't like that, well tough titties. That's how a free labour market works. If you want to get paid the big bucks then I suggest you go and earn yourself the qualifications and skill set to go into the market and demand good renumeration.

As for the retail employees, if they are not happy with their current renumeration than I suggest they negotiate a better awards with Apple.

No one is 'entitled' to that money.
Rating: 6 Votes

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