Apple CEO Tim Cook has requested to not be issued dividends on his restricted stock units when the company pays out its planned dividend to shareholders this summer. He will be sacrificing a nearly $75 million payout by refusing the dividends.
The Mac ObserverFacing growing concerns over its immense cash balance, Apple announced in March a stock buyback and dividend of $2.65 per share to begin “sometime in the fourth quarter of its fiscal 2012, which begins on July 1, 2012.”
In an amendment filed with the SEC Friday, Apple’s compensation committee declared that the dividend would also apply to restricted stock units (RSUs), a form of compensation granted to some company employees that issues shares in the future based upon certain vesting requirements.
Cook’s 2011 compensation from Apple included a $900,000 base salary, and over $376 million in restricted stock units. Those vest in increments over a 10-year period so long as he remains with Apple. By deciding to grant dividends on RSUs, Apple is compensating employees based on requirements that the employees haven’t as of yet satisfied.
Apple states in its SEC filing: “As restricted stock units are not outstanding shares of common stock and thus would not otherwise be entitled to participate in such dividends,” the amendment explains, “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.”
The same filing revealed Cook’s request to refuse dividends on his RSUs: “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 forgo approximately $75 million in dividend equivalent value.”
The financial industry is divided on Cook’s move. Some see it as altruistic, while others see it as an attempt to avoid the type of negative press Cook received earlier this year, when his compensation numbers were revealed.
