Apple's Tim Cook Voluntarily Forgoes $75 Million Payout

http://www.forbes.com/sites/timworstall/2012/05/25/apples-tim-cook-voluntarily-forgoes-75-million-payout/

by JumpCrisscross • 14 years ago

42 42 14 years ago

Luc• 14 years ago

Another reason may be to avoid a conflict of interest - Tim Cook, as the one ultimately responsible for commencing the payment of dividends, would be paying himself a rather large bonus out of the company cash.

DrJokepu• 14 years ago

I really don't see how that would be a problem; it's not like anyone would doubt that Tim Cook is not worth that money for Apple or that Apple couldn't afford that money. I don't think anyone on the board of Apple would have a problem with Cook getting his share of the dividend.

georgespencer2• 14 years ago

The board of Apple has nothing to do with this.

Apple is a public company. So is Questcor Pharma. Apple is a very public company. They are overanalysed, over-reported, and over-bullshitted by the tech, financial and news press. Their share price organically trades down quite frequently as a result of this. Remember the "oh fuck it's not an iPhone 5 it's just an iPhone 4S" share price?

A big part of Apple's leadership focus at every level is managing expectations. Tim Cook has a major role to play in managing the expectations of people internally, of course, but also externally. And here he's done that by avoiding any hint of impropriety. No Gizmodo headlines. No peroxide CNBC gristleheads asking so-called experts "So, David, Tim Cook institutes dividends and then receives $75m himself? Are the shareholders gonna put up with that?!"

This is an excellent, excellent piece of management. And I bet it's worth nearly $75m in avoided short term down trading to Cook's stock package.

iProject• 14 years ago

Another way of putting this would be: Leadership.

Apple comes into a lot of criticism for the constraints that it puts on its employees. If I were an Apple employee, Cook’s action here (omitting financial gain form himself) would be a valuable demo to me of commitment to employees' welfare.

joelrunyon• 14 years ago

Exactly.

I hate how the author automatically assumes the worst about Cook and that it has to do with taxes (even if it did, I'm pretty sure 75 million - (whatever taxes incurred) is still quite a few million).

I think it makes sense and is a solid move that he recognizes that he's issuing the dividends and that taking them could appear as a conflict of interest. If I was an Apple employee, I would be impressed.

brown9-2• 14 years ago

Doesn't every corporation with a CEO face this same conflict? I think that is what compensation committees of the board of directors are for.

fijal• 14 years ago

According to forbes [http://people.forbes.com/profile/timothy-d-cook/6607] he has 52bln$ in stock. He's just giving up on loose change. This is comparable to me giving up back to the company around $30, I think I would not have a problem with it (it also would not make big news)

UPDATE: ups, indeed, I can't read, moot point then

crntaylor• 14 years ago

That's $52 million, not $52 billion, and that's 2010 income. He has unvested stock worth up to half a billion over the next decade (assuming the share price stays roughly where it is at the moment).

muench• 14 years ago

That's an award of $52 million restricted stock units for compensation in 2010. If he had $52 billion in apple stock he'd be near the top of the list of billionaires.

patio11• 14 years ago

It's probably actually higher, since Apple has so much cash lying around. They have no reasonable prospect of spending it and they're getting to the point where no acquisitions that make sense would dent the horde. (I mean, they could buy a carrier, but why buy the cow if you already get all of the profits of milking it for free.)

This suggests that, like MSFT before them, they'll eventually raise dividends.

</amateurish speculation>

wh-uws2• 14 years ago

I like it though (despite it being "amateurish speculation").

Allow me to add my own. I would love to see them purchase a carrier though.

Imagine it. How much better would things get if Apple owned the towers and spectrum too.

They've got more hardware and software talent in units as small as 5 or 10 then some of those companies have in their entire workforce.

And for all the ridiculousness they've put us all through over the years I would love to seen them squirm as they try to figure out how they are going to compete with Apple.

tptacek3• 14 years ago

The thing people don't seem to get about buying a carrier is that you can't just add "Wireless Carrier" to your inventory, dual-wield it, and collect the stats boost.

Carriers are capital-intensive, operations-intensive, customer service-intensive businesses. You have to run them effectively, as a carrier, at huge expense, or they degrade.

Apple has no competence in running wireless carriers. Tens of billions of dollars will buy a lot of competence, but not instantaneously. Given the stakes, I imagine "operating a wireless carrier" is not one of those things you want to learn how to do as you go.

I'm also amused by the sentiment on HN (and the Internet at large) that 2012 wireless carriers are really just a cartel organized to collude on providing bad customer service and exorbitant rate structures. As if no carrier figured out that executing better service and value would improve their competitive position; no, the only reason wireless carriers suck is that they choose to suck!

wlesieutre• 14 years ago

The other problem with owning a carrier is that they'd lose their reputation for perfect performance. If someone's iPhone isn't working, >90% of the time they'll blame it on AT&T/Verizon/T-Mobile/etc. If Apple owned a carrier, the network problems would be on them.

ronaldj• 14 years ago

I don't think carries actually own the towers. They rent them from companies like American Tower Corp I believe.

jakejake• 14 years ago

Well, everybody seems to hate their carrier to some degree. Apple gets to utilize the service without being blamed for the problems. And even if they did own a carrier they'd still have to deal with others as people roam off of their network, so they still wouldn't be in complete control.

I could see Apple buying a carrier purely for investment reasons though, but they could do that with any business they choose.

sgt3• 14 years ago

My heart skipped a beat as I misread the sentence as "[...] Forges $75 Million Payout". I agree with the other commenter in here regarding it being a conflict of interest, as Cook is personally responsible for handling the divident payments to the shareholders.

yalogin• 14 years ago

Does the board have a say in this? Or are dividends something the CEO decides on?

sgt3• 14 years ago

As far as I know, only the board of a company has the power to issue dividends. However, it is often the case that a chief executive officer is also a member of the board, thus giving him power to issue dividends.

Tim Cook serves on Apple's board of directors according to this page: http://www.apple.com/pr/bios/tim-cook.html

lsen001• 14 years ago

Why keep the money at Apple? Why not set up a foundation/donate it to a charity? Could go just as well for Apple's stingy reputation toward charities.

sgt3• 14 years ago

Apple is not a charity. Even though things are going well today in 2012, doesn't mean that things will be going equally well in 2018. In any case, I think there will be issuing of dividends down the line. The shareholders can then themselves decide whether to use the dividends for the purpose of charity or not. I feel this is the most fair way to run a company. (I am not saying that Apple should stay entirely away from charities though.)

mbreese2• 14 years ago

A good to also think about is that not too long ago, Apple was almost bankrupt. A lot of people these days just the of Apple as the iPod/iPhone/iPad titan who makes money hand over fist. But, I wouldn't be surprised if there was a decent amount of institutional memory about their almost fate in the 90s.

If you almost lot it all, only to come back, you might want to kee a large war chest too.

factorialboy• 14 years ago

How cool would it be if he donated it to cancer research?

rob08• 14 years ago

This is actually not really news since Apple said this already on their dividend announcement in March. Check the transcript for source

Apple's Tim Cook Voluntarily Forgoes $75 Million Payout

Related Stories