"Where is the outrage ? $10,600,000 in options for 8 months work for (Mr Cook as an example) an executive who also rec'd $500,000 to join AAPL (July ?) for a executive salary , then dumps his shares . "
JRK, I know you're probably a bit frustrated at the horizontal movement of the stock but there are a number of reasons why AAPL has been under pressure and remains at this level of low valuation. Blaming the execs aren't going to help. As investors what we need to do is determine what these "reasons" are (we'll discuss the some specific reasons at a later date) and use a little patience and wait for those issues to be resolved so that the share price will reflect more accurately the true value of the stock.
As for the insider selling back in Feb, by reading the 10K, proxy statement, and 144 filings one would have a better understanding of the mechanics and reasons for these insider selling. It really isn't as sinister as you suggested.
First of all, all the top execs currently have rather large amount of options in Apple. The vast majority of the options were either the result of the options reprice program that was implemented in 97-98, or were EARNED at NeXT and exchanged for AAPL options when Apple bought NeXT out. Every year a small fraction of those options become vested and exercisable. Because these executives have large number of remaining stakes in AAPL that are not yet vested, it is only wise to sell the portion that becomes vested to minimize the exposure of risk to a single company...essentially diversifying one's portfolio.
Because a small portion of these option for each of these top executives becomes vested in January of each year, we see a cluster of selling in Jan.
As for Tim Cook, he was hired in Feb- March of 1998. Feb 1999 was the anniversary of his employment at Apple. This is why his option became vested a month or so later than rest of the executives.
We should dispel the myth that Tim Cook made $10.6 million off of selling AAPL stock in Feb. I know Yahoo's listing seems to indicate that there were TWO 175k share transaction but that is inaccurate. As I understand it, 175k shares out of 700k shares (1/4) in stock option became vested and was sold this year. The total amount of the transaction brought in $5.3 million at approximately $30 per share, BUT that was not all profit. The exercise price for Tim Cook's options is $17.6875 according to proxy statement. This means that the cost to Mr. Cook was $3.09 million. So the net profit before tax was about $2.2 million not $10.6 million. Had Cook decided to exercise the option but not sell the vested shares, he would have had to fork over $3.09 million to Apple to purchase shares in a company that he already has high exposure in... not exactly a sensible thing to do. As much as we all love AAPL and believe in the company I don't think any of us would choose to do that if placed in Cook's shoes. So we certainly can't expect an intelligent executive like Cook to do something we ourselves wouldn't do.
JR, if you're still concerned about the insider selling, there were some discussion of it on AAPL Investors page back in Feb. Hope that helps.
Bests,
Eric |
