So Apple (AAPL)..let me get this straight

By: ispeculatornew
Date posted: 01.13.2012 (5:00 am) | Write a Comment  (2 Comments)

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Apple is a great company, perhaps the greatest of our generation thanks in large part to Steve Jobs. Say what you want about the guy, he led what is probably the most remarkable comeback in corporate history. The company is at the top of the tech sector in front of companies like Microsoft (MSFT) and Google (GOOG) and continues to grow even after Jobs’ departure. In fact, I have put myself out there saying that “you’d need to be crazy to not own Apple (AAPL) right now” given the valuation, the risk vs. reward, etc. There are very few things you could say against Apple, how they run things, etc.

One Recurring Critic

One theme that comes up over and over is the fact that despite growing mountains of cash, the company refuses to pay out dividends back to its shareholders, preferring to keep the money for possible acquisitions, etc. At this point, that stack of cash is becoming rather large, even for a company that could eye major acquisitions in the coming years…

So Back To The Subject…

Earlier this week, after markets had closed, Apple filed an SEC document where it had to disclose among other things executive compensation. Turns out that newly appointed CEO Tim Cook’s base salary was $900,000 in 2011. That seems low for a company that is making billions in profits.

That “Other Compensation”

However, Cook also received shares and options of Apple worth over $375 million dollars!!!! Sure, he can only sell half of those in 5 years and the other part in 10 years, but that is still an insane amount of money. If Apple’s stock does continue to increase, those will be worth even more. In fact, as of yesterday, the value is slightly higher than what he was given… in fact, his options are now worth over $420 million!!!

So Is Tim Cooke Worth $380M…?

I’m usually in favor of high compensation for executives, especially when it’s paid out in shares and options like this. Why? Because, believe me, Tim Cooke has a lot of incentives to keep things going well for Apple and for the stock price to increase many times what it currently stands at. Also, it’s easy to overstate this but it’s true. If Tim Cooke is able to deliver even 1-2% more in earnings than what others could have done because of his experience, knowledge, etc… then, it is probably a great move by Apple.

There Is An “If”

Honestly, was Apple’s board forced to give out this much. We all want Tim Cooke to have strong incentives, but wouldn’t $100M been enough? I’d love to know how they came up with such a huge number. Did Mr Cooke negotiate this for himself? If so, I’d love to get a few tricks from him…

Is Apple Rich Enough That It Can “Throw Money Away?”

If that is the case, now would be a great time to pay out a dividend to its shareholders…

Just sayin’

Disclosure: Long Apple (AAPL) but closing that position on today’s opening:)

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2 Comments

  1. […] So Apple (AAPL)..let me get this straight […]

  2. […] value of those dividends and earnings (for companies that are too stubborn to pay out dividends.. Apple AAPL anyone?). What can influence the stock is extremely large, it can be growth, competition, costs, […]

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