Sure would be nice to see some insider buying while we wait...
Incentives
Steve Jobs made his money on the stock, not on salary, bonuses or other flimflam. If the stock went up, he made money. If it had gone down, he would have lost it.
And new CEO Tim Cook, the man who will be on stage Wednesday, is in the same boat.
On Aug. 24 of last year, when he took over from Jobs, Cook was granted a giant fistful of restricted Apple stock: 1 million shares.
That’s some incentive.
They had a face value of $380 million when he got them. In the year and three weeks since, he’s made another $285 million in paper gains on that stock alone.
Cook was already holding about 360,000 shares of restricted stock even before taking the helm. Bottom line? The man has made about $390 million on his Apple stock in the 55 weeks since taking over, and his stake is already worth more than $900 million.
No kidding. Just over a year ago, he was someone you’d never heard of. Now he’s nearly a billionaire, thanks to the iPhone, the iPad and the like.
How’s your portfolio done in the past year?
(If you’re curious, the 5.5 million Apple shares that the late Steve Jobs left in his estate have gained about $1.6 billion in value since he stepped down as CEO.)
But there’s a twist. Cook can’t cash in most of those shares for years. Of the 1 million restricted shares he was given in August of last year, half of them won’t get unlocked until 2016, and the other half won’t until 2021.
In other words, Tim Cook’s incentives are the complete opposite of those now considered normal in big public companies. He can’t make lots of money by taking big gambles with stockholders’ money, or by juicing the stock for a short-term pop. The only way he can make serious money is by building long-term value.
The future is unknowable—especially in the technology industry, and especially over five or 10 years. I’ll be amazed if iPhones and iPads have the same cachet or cult status then that they seem to have now. But if you are an Apple stockholder, there is some comfort in knowing the CEO and you dine at the same table (even if your portions differ somewhat in size).
All public-company CEOs should be rewarded like this. Maybe then we’d have an economy oriented more toward long-term, sustainable growth than short-term action.
Instead, most are loaded down with bonuses, top-up incentives, stock, options, and as many other freebies as their greedy little arms can hold. Many of the bankers who crashed the economy in 2008 walked away with fortunes, even while their stockholders (and the country) lost their shirts. No wonder what happened, happened.
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