AppleInsider Staff
Apple earlier this month implemented a new corporate governance stipulation that requires top executives to hold company stock worth at least triple their base salary.
The discovery of the new rule, as reported by The Wall Street Journal, comes one day after Apple held its annual shareholders meeting, where similar changes to corporate governance measures relating to executive stock holdings were up for vote.
According to a notice on Apple's investors webpage, the requirement took effect on Feb. 6, roughly one month after the company first issued its definitive proxy statement.
Interestingly, the policy is somewhat contrary to a similar proxy proposal that shareholders voted against on Wednesday. Apple's board urged a vote against Proposition 5, titled "Shareholder Proposal Entitled Executives to Retain Significant Stock," which recommend executives retain 33 percent of their stock holdings until retirement.
Apple's implementation of the executive stock holding policy comes amidst growing pressure from shareholders concerned over the company's decining stock price, which has slipped over 36 percent since hitting a high of just over $700 in September 2012. AAPL closed at 441.40 on Thursday after shedding $3.17, or 0.71 percent, from its price at the opening bell.
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30 Comments
Interesting. Should be pretty easy for Cook to meet this - he only makes $1 per year in base salary right?
I find this difficult to follow. So, an employee will have to run out and buy more stock if the price falls? Obversely, if the stock up by more than 300% in aggregate value of base pay, won't they have an incentive to sell? Wouldn't such insider buys and sells simply roil the stock even more!?
And what about the fact that an average employee has no direct control over what the market does with Apple's stock? They control the cash flows from Apple -- if that -- but they have very little to do with determining the market's perception of Apple's risk, its mood swings, momentum-based trades, high-frequency trades, etc.
This policy makes makes no sense at all. Need more information, AI.....
[quote name="anantksundaram" url="/t/156234/apple-execs-now-required-to-hold-triple-their-salary-in-stock#post_2285777"]I find this difficult to follow. So, an employee will have to run out and buy more stock if the price falls? Obversely, if the stock up by more than 300% in aggregate value of base pay, won't they have an incentive to sell? Wouldn't such insider buys and sells simply roil the stock even more!? And what about the fact that an average employee has no direct control over what the market does? This policy makes makes no sense at all. Need more information, AI..... [/quote] I read it as top execs only. But to your point, it's still ridiculous to me as well.
[quote name="anantksundaram" url="/t/156234/apple-execs-now-required-to-hold-triple-their-salary-in-stock#post_2285777"]I find this difficult to follow. So, an employee will have to run out and buy more stock if the price falls? Obversely, if the stock up by more than 300% in aggregate value of base pay, won't they have an incentive to sell? Wouldn't such insider buys and sells simply roil the stock even more!? And what about the fact that an average employee has no direct control over what the market does? This policy makes makes no sense at all. Need more information, AI..... [/quote] [quote name="AppleInsider" url="/t/156234/apple-execs-now-required-to-hold-triple-their-salary-in-stock#post_2285761"]... top executives ...[/quote]
[quote name="anantksundaram" url="/t/156234/apple-execs-now-required-to-hold-triple-their-salary-in-stock#post_2285777"]I find this difficult to follow. So, an employee will have to run out and buy more stock if the price falls? Obversely, if the stock up by more than 300% in aggregate value of base pay, won't they have an incentive to sell? Wouldn't such insider buys and sells simply roil the stock even more!? And what about the fact that an average employee has no direct control over what the market does with Apple's stock? They control the cash flows from Apple -- if that -- but they have very little to do with determining the market's perception of Apple's risk, its mood swings, momentum-based trades, high-frequency trades, etc. This policy makes makes no sense at all. Need more information, AI..... [/quote] As I understand it, it only applies to the execs, not the blue coloured employees.