Apple Inc. (AAPL) Tightens Its Golden Handcuffs

Good guy Cook
The ownership guidelines are meant to instill confidence in shareholders that management is going to stay on their side. It was widely reported that at the annual meeting Cook commented on the plunging share price and added, “I don’t like it either.” That’s a shocker, since I would have thought him to be simply thrilled that his net worth (including unvested RSUs) has declined by over $300 million since September. Headlines of his disappointment were news to me.

It may be worth noting that Cook has voluntarily chosen to have his hefty RSU holdings be excluded from dividend equivalent payments, while others’ RSU holdings receive payments. With the prospect of an increased dividend as the most imminent catalyst, it’s encouraging to know that a payout boost won’t cost shareholders more in the form of additional compensation for Cook.

Apple Inc. (NASDAQ:AAPL) currently pays out $10.60 in dividends annually, and at over 1.1 million shares, Cook is already giving up nearly $12 million per year — over eight times his base salary. If Apple theoretically doubles its dividend, Cook would be missing out on $24 million in dividend equivalents annually, or 17 times his base salary. That’s what I call noble.

Skepticism aside, the changes are improvements in corporate governance, even if they have no immediate impact. They won’t help support shares right now, but at least it’s a positive gesture.

The article Apple Tightens Its Golden Handcuffs originally appeared on Fool.com and is written by Evan Niu, CFA.

Fool contributor Evan Niu, CFA, owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple.

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