Apple Inc. Chief Executive Tim Cook is saying “no thanks” to stock dividends potentially worth $75 million.
The company said in a regulatory filing that Cook had volunteered to exempt himself from a new compensation program under which Apple employees could collect a dividend on stock grants that have not yet vested.
The unusual move comes as boards of major companies have faced heightened scrutiny for approving excessive compensation for their CEOs.
After a year that has seen Apple’s reputation tested by controversy over the way its Chinese production partners treated low-paid workers, observers said Cook might have seen an opportunity to bolster the company’s image as a socially responsible and progressive force.
“This strikes me as another important signal Tim Cook is sending that Apple’s user-friendly product image is now to be matched by a social-friendly corporate image,” said Stephen Davis, a corporate governance professor at the Yale School of Management.
Cook would have been entitled to a $2.65 quarterly dividend on each of his 1.125 million restricted shares, called restricted stock units or RSUs. The quarterly payments would have added up to $75 million by the time all the shares vest early in the next decade, the company said.
Apple gave Cook the bulk of his RSUs in a grant last August when he assumed the role of chief executive following the resignation of Steve Jobs. Jobs died two months later after a long battle with cancer.
At the time, Apple’s board awarded Cook 1 million RSUs, half of which vest in 2016 and the other half of which vest in 2021. Under Apple’s new program, Cook could have collected dividends on all of those units, but chose not to.
The choice will leave Apple’s chief far from penurious, however. In the last two months, Cook has hauled in $140 million from selling 240,000 vested Apple shares — a bonanza equivalent to 100 times his annual salary of $1.4 million.
But even that stock sale will seem minuscule if Cook’s tenure at Apple lasts until 2021, when he can cash out the last of his 1.25 million Apple RSUs — an opportunity he is unlikely to forgo.
If Cook sold those shares on the market today, they’d be worth $630 million.