Apple Clearly Investing in New CEO
With all the media coverage surrounding Apple CEO Tim Cook’s stock grant of $378 million, NFPCC decided to take a closer look to ease the frustration that is felt by the general public.
RETENTION & LONG-TERM STABILITY is the name of the game for Apple. Mr. Cook’s stock award was awarded in restricted shares that vest over a 10 year period. Based on a 2008 report by Economix, the average American aged 25 or older will stay at their current job for 5.1 years, whereas, Mr. Cook is tied to Apple for almost twice that amount. This 10 year period is imperative to Apple, in light of the passing of Steve Jobs and the succession planning at Apple, this 10 year handcuff is in place to keep Mr. Cook in his seat at the helm of Apple for the foreseeable future or risk forfeiting the unvested shares. Breaking apart the $378 million into 10 equal pieces, assuming the award vests equally over the 10 year period, comes out to roughly $37.8 million annually. Taking this a step further, on a yearly basis $37.8 million is roughly 0.35% of Apple’s annualized 2011 revenue of roughly $108 billion. The award consists of about ⅓ of 1% of Apple’s yearly revenue. Additionally if you look at the discount present value of the award, the award comes in at approximately $232 million or $23.2 million annually; constituting 0.21% of Apple’s annualized 2011 revenue or less than ¼ of 1% of Apple’s yearly revenue. Looking around the publicly traded marketplace, it wouldn’t take an avid investor long to find a litany of other companies that far outpace this award on an annual basis.
We at NFPCC believe that employees at each company are an ASSET not an expense, whom are in place to drive company performance over the long-term, creating shareholder wealth. Mr. Cook does not have to be Steve Jobs. He merely needs to think of Apple in the way Mr. Jobs did and this INVESTMENT into him compared to the return to stockholders will be worth every penny.
