Apple says CEO Tim Cook is giving up $75 million in dividends on restricted stock.
In a filing with the Securities and Exchange Commission on Thursday, Apple (Nasdaq: AAPL) says Cook requested that his restricted stock units not receive dividends.
Apple made the announcement in a regulatory filing that also says other employees will be eligible to collect the $2.65- a-share quarterly dividend on restricted stock, the same payout that was announced in March for shareholders of the Cupertino, California-based company.
Assuming the company pays dividends of $2.65 over the vesting period of Cook’s shares, the company says he will give up about $75 million in value.
Cook’s total compensation was valued at $378 million when he became CEO in August. That was almost entirely in stock awards. Half of the stock won’t be redeemable until 2016 and the rest won’t be redeemable until 2021. Over that time the value of the shares could change dramatically.
The decision to let employees collect the equivalent of a dividend on stock awards that haven’t vested is unusual, in part because many technology companies don’t pay a dividend, said Glenn Borromeo, a senior consultant at Meridian Compensation Partners LLC, which advises Silicon Valley companies on compensation.
Fewer than half of the companies on the Nasdaq-100 Index pay a dividend.
“It’s giving a little bit of extra compensation,” Borromeo said. “It’s a little bit unusual, but obviously they have enough money so they can and it’s a little kicker for the equity compensation that’s not yet vested.”
Cook, who guided the company while late co-founder Steve Jobs was on three medical leaves and took over as CEO last year, was awarded 1 million restricted shares last year that will vest over the next decade. The grants, worth $565.3 million based on today’s stock price, rank among the largest awards given to a company executive. Apple announced in March that Cook would forgo the dividends.
Other members of Apple’s executive team are eligible for the dividends. Software executive Scott Forstall, hardware manager Bob Mansfield, Chief Financial Officer Peter Oppenheimer, marketing chief Phil Schiller, general counsel Bruce Sewell and operation manager Jeff Williams in November each received 150,000 restricted shares, which vest between 2013 and 2016, according to regulatory filings. Eddy Cue, who handles Internet software, has received 200,000 shares since his promotion last year.
(Bloomberg and The AP contributed to this report.)