Apple Hardware Chief Bob Mansfield Cashes in Nearly $12.5 Million in Stock Options

[malachiman]

It's a good time to cash out. He knows with Steve gone, Apple can only go down in the long run and they're already massively over-valued as it is. They were $83 a share just a few years ago. Over $450 a share? Come on. It would be stupid to invest at that price (and yes there are people at work I know buying it because someone told them it was a $500 stock...yes it might hit $500 for awhile, but gaining $50 isn't worth the risk of it dropping hundreds like it did a few years ago when it went from around $300 to $83 almost overnight). And this time it will NOT come back because Apple is now run by the same types that destroyed it the first time around. Apple has a few more years of profitability based on current products like the iPhone and iPad, but without a visionary to keep the products coming, it's only a matter of time and the stock will start slipping LONG before the profits end (and you don't make a dime when it drops...you lose your shirt and everything else you put into it). Clearly, Bob Mansfield is fully aware of this as the hardware chief and he's taking it to the bank. Kudos to Bob.

You realise that Steve J was not apple right?

Any good leader will create a culture that will out live them, and will develop and empower leaders who will run further than they did. To run further and make Steve’s ceiling their floor demands change. Steve J didn’t come up with all the products himself (I am in no way detracting from what he has done and his vision for Apple)

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If he believes in the company and don't urgently needs the money, this is a wrong move. This is a vote of no confidence for the company.

What does urgency have to do with it? He might want to invest in other business, develop a property portfolio, or what ever. A vote of no confidence would be to resign.

 

[Rocketman]

When AAPL gets to 1250 split adjusted, sell enough for a 300% return then run with it.

Rocketman

 

[MagnusVonMagnum]

Any good leader will create a culture that will out live them, and will develop and empower leaders who will run further than they did. To run further and make Steve’s ceiling their floor demands change.

One could make that same argument for Apple in 1985 and it did do well for awhile as you have assessed. The problem is that without Jobs, they lacked future vision beyond the vector path they were following and without an insightful course correction, so-to-speak, Apple ended up nearly going Bankrupt by 1998 and were going down-hill a long time before that. While the future may not follow that same course with the current incarnation of Apple (at least time it wasn't a faction within his own company that forced him out, implying a divergence of ideas), it will still need to stay several steps ahead of the competition to retain high profit margins and keep driving the stock upward. Jobs was good at this inventiveness. I'm not certain Apple can hope to be the same without him long-term, though. Otherwise, competition will eventually catch up and under-cut with mass-marketing across many product choices and offerings and cheaper prices (like Windows did to the Classic Mac OS, which couldn't even keep up towards the end of its life-span, let alone justify those huge price margins).

I'm not saying Apple is going to go out of business any time soon. I'm simply doubtful that it will continue to rise in stock price unabated without Jobs at the helm. It was a great buy at $82 a share. I'm not willing to risk it at $450 a share for the same company without Jobs, certainly not until I see they have enough talent on board to manage as well or nearly as well without him, which seems doubtful given how he was the one to turn Apple around when no one else there could at the time (i.e. Steve Jobs types just don't grow on trees; he was a fairly unique guy). You can put your money wherever you want, of course.

 

[mrxak]

If I knew I could cash out $12.5 million in stock right now, and live off the interest for the rest of my life, yeah, I wouldn't hesitate. Put it in nice safe bonds, or diversify in some low-drama, dividend-spewing stocks. Like Cartaphilus said, there's not much benefit in letting that stock increase in value, especially considering he's got almost 10x that much coming to him in a few years... even more if the price increases.

Let's say AAPL doubles, and Bob Mansfield held onto these options. He'd have $25 million, pretty nice, but also $228 million from his other options. What's the chance of $12.5 million more compared to the safety of never needing to work another day in your life if AAPL goes to $0 tomorrow?

The rational thing is not to be greedy, and hope to become a billionaire on just AAPL stock, but to diversify, and reduce your risk, and squirrel enough money away that you, your family, and your family's family is set for life.

 

[gnasher729]

I'm not willing to risk it at $450 a share for the same company without Jobs, ....

So you think buying AAPL right now is a bad move, but you criticize Mansfield for cashing in his share options? As has been explained, cashing in is a prudent move even assuming that AAPL is a good investment today, and even if AAPL was _guaranteed_ to go up. But you think it's a bad investment and you _still_ criticize him?

So you reached the stage where you can believe two contradictory things at the same time, as long as both are somehow bad news for Apple or an Apple employee?

 

[MagnusVonMagnum]

So you think buying AAPL right now is a bad move, but you criticize Mansfield for cashing in his share options?

I guess you cannot read either. I APPLAUDED his move and agree 100% with it. You are the one that is confused. You're just too busy telling people they're pulling things out their backside (really smooth) to notice.

As has been explained, cashing in is a prudent move even assuming that AAPL is a good investment today, and even if AAPL was _guaranteed_ to go up. But you think it's a bad investment and you _still_ criticize him?

It wasn't a bad investment for him. He got it at $36.54 a share for god's sake! I was talking about the value of BUYING it now at $452 a share, which I don't think is a sound investment. You can't tell the difference???? You know when people TWIST the truth to make a point, they just look ridiculous.

I've got people telling me no way, Apple is going to $600+ and Bob just cashed out because he owes someone some multi-million dollar gambling debt or something (it sure as hell isn't tuition!)...it couldn't possibly be because he think Apple's peaked or is darn close to it. Fine. They can invest at that rate. It's too rich for my blood. I'll look for greener pastures.

So you reached the stage where you can believe two contradictory things at the same time, as long as both are somehow bad news for Apple or an Apple employee?

You're the only one who is contradicting anything. Maybe you should argue with yourself in the mirror or something?

 

[URFloorMatt]

Well, that's funny because you sound to me like you know exactly nothing about anything. Strange world, eh?

Ugh. If what you've said is true, then Mansfield and possibly Apple are in violation of insider trading laws. When Mansfeld received the stock options, he would've had to create a 10b5-1 trading plan, so in all likelihood, these stock options are being exercised in conjunction with a plan set in place in 2005.

The plans cannot be amended. They can be cancelled by pre-determined market conditions, but the odds that such a condition has been triggered (e.g., by Jobs' death or departure as CEO, assuming that is even a valid trigger) are low, and there are lead-time requirements necessary to insulate the option holder from allegations of using insider information to benefit personally when a new plan is instituted. Mansfield would be the subject of intense investigation if your theory is correct because: (1) he would've created a new plan in the wake of Jobs' death that, (2) less than six months later, (3) while he was acting head of hardware development, (4) cashed out $12 million worth of stock (5) weeks before a major hardware announcement (iPad 3).

Given the concerns that Apple may have violated fiduciary obligations to stockholders for failing to timely disclose closely held non-public knowledge in its possession regarding Jobs' health, it would be incredibly stupid and extremely risky for both Apple's top executives personally and Apple as a corporation itself for folks to be making major stock transactions in the weeks and months following Jobs' death.

In all likelihood, Mansfield created a plan in 2005 that established the following guidelines for how the options would be exercised: 1) wait a minimum of X years (the lead-in requirement), then 2) exercise the option when the stock price hit either Y ceiling or Z floor. Simple as that.

 

[MagnusVonMagnum]

Ugh. If what you've said is true, then Mansfield and possibly Apple are in violation of insider trading laws. When Mansfeld received the stock options, he would've had to create a 10b5-1 trading plan, so in all likelihood, these stock options are being exercised in conjunction with a plan set in place in 2005.

It's only insider trading if he is privy to key non-public knowledge that might affect the company's outcome. We know Steve Jobs died. That cannot be a factor. Apple is bringing in record profits. There is simply no way to judge the public's reaction accurately to any given product. Bob would be no more guilty of insider trading by electing to sell stock he owns than I would for the same uncertain long-term feelings about how high Apple's stock can or will go. As hardware director, he is not in charge of market planning or financial decisions.

The last time I checked, you are allowed to own and trade stock in your own company so long as this trading is done in a way that does not take advantage of non-public information.

While "legal" insider trading cannot be based on material non-public information, some investors believe corporate insiders nonetheless may have better insights into the health of a corporation (broadly speaking) and that their trades otherwise convey important information.

In short, Bob is allowed to buy and sell stock. Unless someone can prove he used inside information to avert a disaster (this might be kind of obvious if Apple's stock dropped suddenly a few days later), what information do you or I not have about Steve Jobs' death and an uncertain future without someone to truly fill his shoes? Likewise, someone like me possibly reading something into his action related to his feeling about the company is a view shared by many. Apple's stock has been going up, not down and so there's nothing to indicate Bob might have any other feeling than a long-term uncertainty as anyone might have with Jobs gone. And he might just be doing it because he doesn't like stock trading in general or having that much tied up in stock. $12 million is a huge chunk of cash. Why risk it if it's all you feel you need?

We have no idea what terms he had in his plan. He may very well have had the option to sell it at the date of acquiring the stocks or having to wait a set period of time thereafter to sell again. The article made it very clear that he waited until THIS point in time to exercise his stock option in conjunction with the stock market (he could have waited several more months, if he chose so that decision alone speaks to me that he feels more confident of the market now than a few months from now). So either way, I fail to see how my comments of this being one I agree with should merit your utter contempt, but then frankly, I don't really care either. Have a nice day.

 

[Cartaphilus]

Apple filed its 10-Q on January 25, and Mansfield sold shortly--but not too shortly--thereafter. This is a sensible time for an insider to trade in his company's stock, since the company will have made substantial disclosures along with its regulatory filings. My guess, and of course it can be no more than a guess, is that the timing of this sale had more to do with the earnings announcement than with the execution of a programmed sale.

One other consideration in connection with the restrictions on sales by insiders is that these options had to be exercised in the next six months or so. Assuming, as is reasonable given his history, that Mansfield had no interest in exercising and holding, he may not have been willing to take the risk that he would come into possession of undisclosed material information and be barred from trading through the options' expiration date. While he may have had the means to exercise and hold, he may well have wished to avoid the attendant risk.

I think this sale contains little persuasive evidence of Mansfield's view of the prospects for Apple and its stock. There are many reasonable suppositions for his selling aside from his harboring any pessimism or optimism. Insiders have been filing their requisite public disclosures of their transactions for many years now, and especially with companies as well-studied as Apple, no one has made his fortune by simply correlating insider trades with the future stock price.

Although Apple's disclosure regarding Steve Jobs' health issue was controversial, the behavior of the stock price all but eliminated any serious complaint. An executive who was unlucky enough to sell Apple stock during the time when only Jobs and a few others knew of his condition would most likely avoid having to refute a charge that he was in the know because of the ensuing behavior of the stock. I doubt Mansfield has any exposure even if he instituted a plan of programmed selling during that time frame.

 

[gnasher729]

I guess you cannot read either. I APPLAUDED his move and agree 100% with it. You are the one that is confused. You're just too busy telling people they're pulling things out their backside (really smooth) to notice.

Here's what you said: "I'm not saying Apple is going to go out of business any time soon. I'm simply doubtful that it will continue to rise in stock price unabated without Jobs at the helm. " So: Bad investment (to buy Apple). In a previous post of yours, it was a wrong move to sell the shares. The post that I complained about said "What does he know what we don't know?" which was a totally baseless accusation of insider trading.

 

[Cartaphilus]

Incidentally, I was curious and looked to see if Apple had established any announced policy with respect to trading programs. It turns out that Apple is one of those companies that has elected to make public disclosure of at least certain of its insiders having established programs, without disclosing either the terms of the arrangement or publicly announcing the types of arrangements it authorizes.

Bob Mansfield has never been identified as one of its insiders who has established a plan, but that may be because of his position in the company.

I suppose I ought to mention, without intending to give offense, that although competent counsel would advise against it, it is not illegal to cancel or to modify a plan. Moreover, if one has been in possession of material non-disclosed information there is nothing wrong with trading after that information has become public. The SEC's adoption of 12b5-1 was only in reaction to a lack of certainty about inside trading caused by conflicting judicial opinions, and was intended only to create an affirmative defense for an insider charged with violating the law. Modifying or canceling a plan, trading outside of the plan, or trading immediately after establishing the plan may deprive one of the affirmative defense, but if the trades are executed without possession of inside information, there is no violation of any law or rule. The only penalty is that a Motion to Dismiss or even a Motion for Summary Judgment becomes far less likely to be granted, requiring more time and money be spent in defending the charge, and increasing the risk of an unjustified adverse outcome.

 

[MagnusVonMagnum]

Here's what you said: "I'm not saying Apple is going to go out of business any time soon. I'm simply doubtful that it will continue to rise in stock price unabated without Jobs at the helm. " So: Bad investment (to buy Apple). In a previous post of yours, it was a wrong move to sell the shares. The post that I complained about said "What does he know what we don't know?" which was a totally baseless accusation of insider trading.

I don't recall ever saying it was wrong to sell the shares. I said he most likely didn't HAVE to sell the shares (if he's confident) or even buy them for a few more months. Clearly, that's at least some evidence that he thinks now is a good time to cash out those options. With the iPad3 coming out soon, one might think he'd wait as long as possible (heck it just shot up to over $500 so you can bet he wished he waited at least a little longer to exercise those options). Markets are volatile, though. It seems to me he made out pretty well regardless. No one will know for sure his motives short of getting him to tell you. It's all just speculation.

 

[MacsRock88]

I was going to Buy some Apple Stocks too, when they dropped to $75!

One could make that same argument for Apple in 1985 and it did do well for awhile as you have assessed. The problem is that without Jobs, they lacked future vision beyond the vector path they were following and without an insightful course correction, so-to-speak, Apple ended up nearly going Bankrupt by 1998 and were going down-hill a long time before that. While the future may not follow that same course with the current incarnation of Apple (at least time it wasn't a faction within his own company that forced him out, implying a divergence of ideas), it will still need to stay several steps ahead of the competition to retain high profit margins and keep driving the stock upward. Jobs was good at this inventiveness. I'm not certain Apple can hope to be the same without him long-term, though. Otherwise, competition will eventually catch up and under-cut with mass-marketing across many product choices and offerings and cheaper prices (like Windows did to the Classic Mac OS, which couldn't even keep up towards the end of its life-span, let alone justify those huge price margins).

I'm not saying Apple is going to go out of business any time soon. I'm simply doubtful that it will continue to rise in stock price unabated without Jobs at the helm. It was a great buy at $82 a share. I'm not willing to risk it at $450 a share for the same company without Jobs, certainly not until I see they have enough talent on board to manage as well or nearly as well without him, which seems doubtful given how he was the one to turn Apple around when no one else there could at the time (i.e. Steve Jobs types just don't grow on trees; he was a fairly unique guy). You can put your money wherever you want, of course.

I was about to buy the Apple stocks myself for only $75 a share, but something stupid stopped me! I'm so ticked off at myself for not buying the stocks. I'd be rich as Beverly Hillbilly now if I did so...
Nope - Mac products have ALWAYS rocked. this company is NOT going to go out of business unless ppl just stop buyin' computers period!
Macs have always been great. Make sure to update your anti-virus protection though folks. Hackers are learning how to hack into Macs now, they are more prolific, even though it's much harder to do so with a Mac, than a PC!
Though they are more expensive, they are so worth it.. They last forever, if you take good care of them. I do wish they had more applications like the PCs do though....
I did buy some software a while back for that program that does Flying... I think it was for PCs, but somewhere I have the program that lets you switch over to PC programs, but I put it away somewhere and wil have to find it first.
Sorry to hear of Steve Jobs passing. What kind of cancer did he die of?