Apple CFO Luca Maestri sells shares worth $16.9M

The reason for the timing of these sales is pretty clear. The shares were sold when the share price climbed back above the share price at their vesting.

In recent years Mr. Maestri has routinely sold newly vested shares shortly after their vesting (e.g., not the day after vesting but a few days or weeks later). But he doesn't sell them at a share price lower than the vesting price (i.e., the cost basis). This is true of his time-based shares which vest every April and his performance-based shares which vest every October. He receives the shares, minus the 50+% which is withheld for tax purposes, and then sells all of them shortly thereafter if the share price hasn't gone down. In this case the share price started to drop shortly after these shares vested and didn't get back to the vesting price until the day they were sold, more than 4 months later.

carnegie said:

The reason for the timing of these sales is pretty clear. The shares were sold when the share price climbed back above the share price at their vesting.

In recent years Mr. Maestri has routinely sold newly vested shares shortly after their vesting (e.g., not the day after vesting but a few days or weeks later). But he doesn't sell them at a share price lower than the vesting price (i.e., the cost basis). This is true of his time-based shares which vest every April and his performance-based shares which vest every October. He receives the shares, minus the 50+% which is withheld for tax purposes, and then sells all of them shortly thereafter if the share price hasn't gone down. In this case the share price started to drop shortly after these shares vested and didn't get back to the vesting price until the day they were sold, more than 4 months later.

Thanks very much for adding this. The article is poorer for its lack.

carnegie said:

The reason for the timing of these sales is pretty clear. The shares were sold when the share price climbed back above the share price at their vesting.

In recent years Mr. Maestri has routinely sold newly vested shares shortly after their vesting (e.g., not the day after vesting but a few days or weeks later). But he doesn't sell them at a share price lower than the vesting price (i.e., the cost basis). This is true of his time-based shares which vest every April and his performance-based shares which vest every October. He receives the shares, minus the 50+% which is withheld for tax purposes, and then sells all of them shortly thereafter if the share price hasn't gone down. In this case the share price started to drop shortly after these shares vested and didn't get back to the vesting price until the day they were sold, more than 4 months later.

The SEC closely regulates how executives can sell sock and it has to be arranged well in advance. What you are describing "sells all of them shortly thereafter if the share price hasn't gone down" wouldn't fly. He has to set the date and gets whatever he price he gets. If he hasn't lost money on them them is more a product of AAPL doing well rather than him waiting for the price to go up. 

FileMakerFeller said:

carnegie said:

The reason for the timing of these sales is pretty clear. The shares were sold when the share price climbed back above the share price at their vesting.

In recent years Mr. Maestri has routinely sold newly vested shares shortly after their vesting (e.g., not the day after vesting but a few days or weeks later). But he doesn't sell them at a share price lower than the vesting price (i.e., the cost basis). This is true of his time-based shares which vest every April and his performance-based shares which vest every October. He receives the shares, minus the 50+% which is withheld for tax purposes, and then sells all of them shortly thereafter if the share price hasn't gone down. In this case the share price started to drop shortly after these shares vested and didn't get back to the vesting price until the day they were sold, more than 4 months later.

Thanks very much for adding this. The article is poorer for its lack.

You're welcome.

But, to be fair, the writer would have to follow Apple's corporate filings pretty closely to be aware of what I described. There are a lot of executives at Apple making a lot of Section 16 filings and their transactions follow different patterns (or, perhaps for some, no patterns at all). And I'm not sure every sale by an Apple executive is worth the time to research their past history to figure out if there's any insight that might be found and reported.

Stabitha_Christie said:

carnegie said:

The reason for the timing of these sales is pretty clear. The shares were sold when the share price climbed back above the share price at their vesting.

In recent years Mr. Maestri has routinely sold newly vested shares shortly after their vesting (e.g., not the day after vesting but a few days or weeks later). But he doesn't sell them at a share price lower than the vesting price (i.e., the cost basis). This is true of his time-based shares which vest every April and his performance-based shares which vest every October. He receives the shares, minus the 50+% which is withheld for tax purposes, and then sells all of them shortly thereafter if the share price hasn't gone down. In this case the share price started to drop shortly after these shares vested and didn't get back to the vesting price until the day they were sold, more than 4 months later.

The SEC closely regulates how executives can sell sock and it has to be arranged well in advance. What you are describing "sells all of them shortly thereafter if the share price hasn't gone down" wouldn't fly. He has to set the date and gets whatever he price he gets. If he hasn't lost money on them them is more a product of AAPL doing well rather than him waiting for the price to go up. 

Mr. Maestri has a 10b5-1 trading plan in place, of course. I wasn't suggesting otherwise. But such plans don't require that trading dates be specified. They can lay out all kinds of different criteria which would then be used to determine when trades are made. The key is that that insider can't have ongoing discretion (i.e. while they have current MNPI) as to when trades are made. The instructions they provide in a trading plan have to effectively determine when the trades are made.

Such a plan could, e.g., say: Sell X number of shares on this date. Or sell X number of shares when the share price reaches Y. Or, if the share price drops more than 20% from a peak, then sell X% of my shares when the share price rebounds back to within 5% of the peak. Or, sell all of my net newly vested shares 5 days after they vested, so long as that isn't a Tuesday and so long as a corporate earnings release isn't scheduled within the next 2 weeks and so long as the share price hasn't dropped below the closing share price on the day the shares vested.

I obviously don't know exactly what Mr. Maestri's current trading plan says. But, as I said, he routinely sells all of his net newly vested shares soon after they vest. Sometimes it's a few days, sometimes it's a few weeks. Further, for many years now, he never sells them at a share price below the share price at vesting. As for that just being a function of Apple doing well, the point is that's not always the case - the share price doesn't always go up or maintain shortly after Mr. Maestri's (and many other Apple executives') shares vest. Indeed, in this case the share price went down and stayed lower for quite a while. Mr. Maestri's shares from his April vesting were sold more than 4 months later on the very day the share price finally returned to where it had been when those shares vested. There's a pattern in Mr. Maestri's trades that makes it very likely that one of the instructions in his trading plans has been that shares shouldn't be sold at a price lower than their vesting price. There's too many data points to believe this is just a coincidence.

That said, to clarify a couple of things: An insider doesn't have to arrange sales in advance. It's just much safer to use a 10b5-1 trading plan because, if they comply with certain requirements, having such a plan can be used as an affirmative defense against charges of insider trading. Also, an insider doesn't even have to lay out definitive criteria as I described above in order to use a 10b5-1 trading plan as an affirmative defense. They can give another party discretion to decide when to make trades. The key, again, is that the insider can't have ongoing discretion and the party which does have discretion can't have access to current MNPI.