Friday, March 24, 2006, 03:00 pm PT (06:00 pm ET)
Apple\'s Jobs pays $295M in taxes on 10M vested sharesApple Computer chief executive Steve Jobs this month used over 4.5M of the 10M restricted shares owed to him by the company to pay income and other employment taxes applicable to those shares, AppleInsider has discovered.
He did not sell any of his stake in the company.
In order to meet his tax obligations on the 10M restricted shares, which vested this month, Jobs elected to net-share settle — essentially allowing Apple to withhold and pay to authorities the portion of the 10M shares that would meet his tax payment requirements.
On March 19 — the date of the transaction — this portion amounted to 4,573,553 shares at $64.66 a share, or a whopping $295.7M tax payment. Apple then turned over to Jobs the remaining 5,426,451 shares, which at the close of the market on Friday were worth about $325.4M. The value of the withheld shares ($295.7M) will be turned over to the appropriate tax authorities.
As part of the net-share settlement, Apple will essentially sell, repurchase and then retire the 4,573,553 shares it used to pay Jobs' taxes. These transactions will not represent expenses to the company, but will be accounted for as reductions to cash with corresponding reductions to shareholders' equity.
Therefore, the net-share settlement will have the effect of a share repurchase by the company — essentially Apple reinvesting in itself, which will reduce the number of outstanding Apple shares on the market.
Apple gave Jobs the 10 million shares of restricted stock back in 2003, in exchange for worthless options on a split-adjusted 55 million shares. The options were "worthless" because the shares had dropped 80 percent in the preceding three years amid a worldwide economic slowdown that crimped computer purchases.
In addition to the 5,426,451 shares Jobs now retains, he also holds 120,000 fully vested options received in 1997 under the director stock option plan.
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