Apple CEO turns down $75m dividend payout

Macworld Australia Staff
25 May, 2012
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Apple CEO Tim Cook has turned down a US$75 million windfall as the company readies to pay out restricted stock unit dividends held by employees.

An Apple amendment report overnight stated that the employees will receive US$2.65 per RSU share, in line with the cash dividend due to be paid to shareholders, as announced in March.

Restricted stock units, similar to stock options, are awarded to employees as incentives and cannot be sold before a certain time period according to the report.

Cook’s potential US$75 million dividend returns were amassed when he received a million RSUs with his promotion to CEO last year.

“At Mr Cook’s request, none of his restricted stock units will participate in dividend equivalents,” the report said. “Assuming a quarterly dividend of US$2.65 per share over the vesting periods of his 1.125 million outstanding restricted stock units, Mr Cook will forego approximately US$75 million in dividend equivalent value.”

Cook’s five- and 10-year RSUs cannot be sold before 2016 and 2021.

“The amendments provide that if the Company pays an ordinary cash dividend on its common stock, each award will be credited with an amount equal to the per-share cash dividend paid by the Company, multiplied by the total number of restricted stock units subject to the award that are outstanding immediately prior to the record date for such dividend,” the report stipulates.

“Depending on the domicile of the employee, accumulated dividend equivalents will either be paid in cash or used to offset employee taxes due upon vesting of the restricted stock units.

“As restricted stock units are not outstanding shares of common stock and thus would not otherwise be entitled to participate in such dividends, 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.”





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