There’s a new rule at Apple: if you’re an executive or board member, you’re not allowed to let your holdings of Apple shares get below a certain threshold. The company recently instituted new requirements that CEO Tim Cook has to hold stock worth 10 times his base salary, that other executives hold three times their base salary, and that members of the board of directors who are not Apple employees keep Apple stock worth five times their annual retainer, according to new company stock ownership guidelines published in February.
Cook’s annual base salary is $1.4 million; which means he’ll be required to keep a minimum of $14 million in stock as long as he’s chief executive. Apple’s proxy statement identifies the following as “executive officers”: SVP of Internet Software and Services Eddy Cue, SVP of Software Engineering Craig Federighi, SVP of Technologies Bob Mansfield, CFO Peter Oppenheimer, SVP of Hardware Engineering Dan Riccio, SVP of Marketing Phil Schiller, General Counsel Bruce Sewell and SVP of Operations Jeffrey Williams.
The timing of the rule change is interesting because it came right before Apple shareholders voted down a broader proposal earlier this week that would have required Apple senior executives — as opposed to executive officers — to keep a certain amount of company stock on hand. And it comes in the midst of a six-month-long stock slide from just above $700 to around $430.
Apple’s stock has been slipping, and while he never comments on the stock price, Cook actually told investors at the annual meeting that he “didn’t like” Apple’s falling share price.
The new rule’s insinuation is that Apple must prove its executives are as invested in Apple’s stock value — and by extension the future of the company — as the rest of the investors who own stock in the company. Which seems unnecessary and odd. If anything, Cook’s been remarkably sensitive to shareholders’ concerns — far more than his predecessor, between reinstating Apple’s dividend last year, to public promises to consider schemes cooked up by publicity-hungry hedge fund managers. But it’s extremely unlikely that being personally sensitive to the stock price is going to somehow change what Apple executives are doing on a regular basis right now.