Apple (Nasdaq: AAPL) is requiring Chief Executive Officer Tim Cook to hold 10 times his base salary in company stock under a corporate-governance measure, amid slowing profit growth that has battered shares.
Meanwhile, in other news, billionaire investor David Einhorn’s Greenlight Capital is dropping its lawsuit against Apple over preferred shares.
Executive officers must own triple their base salary in stock, according to ownership guidelines posted on the company’s website. Non-employee directors need to hold five times their annual retainer in stock.
The requirement is similar to a proposal investors rejected at Apple’s annual meeting this week, which would have required executives to hold more common stock to ensure that their interests are aligned with shareholders. Apple has traditionally used restricted stock units to retain senior executives, and gave Cook 1 million of the shares that vest over time when he took over as CEO from co-founder Steve Jobs in 2011.
Apple’s shares have lost more than a third of their value since hitting a record high in September on concern that demand for iPhones is ebbing. Amid slowing growth, Cook faces mounting pressure from investors to return more of Apple’s $137.1 billion in cash and investments to shareholders.
Cook has proved more sensitive to shareholders’ concerns than his predecessor. While Jobs long dismissed investors’ cash demands, Cook reinstated the company’s quarterly dividend and unveiled a $10 billion stock buyback program last year.
Investor Suit Dropped
Also Friday, Einhorn’s Greenlight Capital said it will drop its lawsuit against Apple Inc. over a preferred share measure after the iPad maker agreed to withdraw the disputed proposal.
“Plaintiffs intend to voluntarily withdraw their complaint,” U.S. District Judge Richard Sullivan in Manhattan said in an order dated yesterday.
Greenlight won an injunction Feb. 22 barring Apple from moving forward with a shareholder vote on a measure that could have curtailed the company’s ability to issue preferred shares. The judge sided with the hedge fund’s contentions that the measure was improperly bundled with other items up for vote.
The hedge fund and its founder, Einhorn, have urged Apple to issue high-yielding preferred shares to spread the company’s cash hoard among investors.
“Apple removed the bundled proposal from the shareholder meeting, therefore resolving the issue,” Jonathan Gasthalter, a spokesman for New York-based Greenlight, said in an e-mail.
Steve Dowling, a spokesman for Cupertino, California-based Apple, declined to comment on the case.