Tim Cook and Eddy Cue Receive Combined $94 Million in Apple Stock

[rdlink]

Heh, in one of my college classes we had to create a spreadsheet of all things we wanted in life if money was no object.

Lets just say after 1.43 billion, I couldn't find anything else to spend on.

This included 76 cars (classic and exotics), a house or condo in Cali, NYC, Paris, Tokyo, and few scattered elsewhere on private islands. A private jet and yacht. A baseball and football team. And a bunch of gadgets and so forth.

The interest and income generated from some of the stuff would make me so much richer that I couldn't keep the spend up. So spending a few hundred million is easy to prove. Spending billions is a LOT harder. I mean, you literally have to buy a hammer for 100 grand to blow through money faster.

This did not take into account any taxes paid on the properties.

The result proved that after a certain point a single person can not spend fast enough the income earned.

Depends on the person and the income.

First of all, you mentioned a lot of stuff like cars, condos, houses, private jets and yachts. Did you factor in upkeep on those items. If you think about your own house (assuming you own one) the cost of buying the house is one thing, but there are numerous outlays involved with keeping it up every year. Things like property taxes, utilities, insurance, yard and inside maintenance, repairs, etc. Magnify that by multitudes when you start looking at things like large mansions, jets and yachts.

Second, you hear stories all the time of athletes and entertainers who blow through tens or hundreds of million dollar fortunes. It's amazing what "normal" becomes when you start playing on that level. Even looking at my own situation, I make a nice, 6-figure salary. But I am not living like a rock star compared to the days when I was making about 1/5 what I am now.

 

[Larry-K]

Whew, that's a relief. I was afraid they'd be reduced to eating Ramen soon.

 

[ActionableMango]

The big difference being everyone is still on their free trial..... Once the free trials are up then the numbers will mean something.

Excellent point.

I myself haven't switched from Spotify, mostly because I'm embedded into it... I have all my playlists built. And while I don't like the interface, I am at least used to it. But on the other hand, Siri integration with Apple Music is very tempting.

 

[Analog Kid]

Money is never enough! The more you have it, the more ways you find to spend it. We, humans, are greedy (most of us)! I just look at myself. Hourly job during high-school was never enough! Better hourly-job during college was never enough. A great first job with a decent salary out of college was never enough. 10 years after college, and this awesome paying job is still not enough.

It's not about spending it, it's about having it. It's about status amongst ones peers. Sometimes you get a blue ribbon for excellence, sometimes you get your picture on the employee of the month plaque, sometimes you get an extra few zeros on your bank statement.

When I enter a road race, I have no idea what place I finished at so it's really more about the exercise and personal achievement. The elite runners know exactly how many people are ahead of them. Same is true about the Fortune billionaire's list.

 

[CFreymarc]

What do you even do with all of that money is beyond me.

When you have that much cash, you go from consumption to investment and phlantrophy. You make it so you invest in other companies, pass on the touch and give to charities that support your vision.

 

[Analog Kid]

we can nitpick Eddy's direct involvement in specific projects, but at the end of the day, Apple is seeing record revenues and profits regularly while he's there. Board of directors must believe he is entitled to bonus awarded.

I dunno. I'm not on the board .

But I have a very VERY strong dislike for Stock based awards and bonuses because of their tax avoidance implications.

I much prefer stock based awards-- I just think they have to have longer vesting periods. Stock based compensation, in theory, assures that the executive's incentives are aligned with the health of the company-- but to make that work, the vesting period needs to be long enough that short term shenanigans can't be used to hide long term strategic success.

 

[Glideslope]

Total Bull****. Eddy and Tim need to be gone by Q4 2016. They did not earn this from a performance point.

 

[LordVic]

I much prefer stock based awards-- I just think they have to have longer vesting periods. Stock based compensation, in theory, assures that the executive's incentives are aligned with the health of the company-- but to make that work, the vesting period needs to be long enough that short term shenanigans can't be used to hide long term strategic success.

those are great points for why stock awards are good for maintaining a vested interest by the recipient
.

I'm just thinking of it from a taxation standpoint. I'd like to see if stock is awarded for employment, such as as bonuses and payment, that it is taxed at income tax levels, so that it is kept in line with what the majority of people pay in taxes, vs the Capital gains method.

 

[Glideslope]

I wonder why only Eddy got this and not the other execs. Unless they're on a different schedule.

Think a little deeper about it?

 

[vannibombonato]

Rarely have I thought that someone deserves so exceptionally huge amounts of money.
But I think this is the case, not really for what has or has not happened over the last few years, but for the exceptionally high grade of difficulty that takes for someone being in that position today, surviving many and many years of insanely high expectations and consistently delivering.

 

[Glideslope]

I knew something like this was coming when Cook put out a statement to calm the drop in Apple stock...that was so rare for Apple that it could only have been self serving

Very astute observation. Can't wait for the SEC investigation forthcoming.

 

[applepuree]

Have a little chuckle at the cheap Foxconn staff that enabled your fortune?

and at your retail staff who struggle to pay their rent.

 

[citysnaps]

Great to see Tim Cook substantially exceeding expectations. Well done - he's worth every bit of his compensation.

 

[Carnegie]

those are great points for why stock awards are good for maintaining a vested interest by the recipient
.

I'm just thinking of it from a taxation standpoint. I'd like to see if stock is awarded for employment, such as as bonuses and payment, that it is taxed at income tax levels, so that it is kept in line with what the majority of people pay in taxes, vs the Capital gains method.

It depends to some extent on the nature of the stock-based reward that is being given. But when it comes to this situation, these RSUs, they are taxed as normal income.

RSUs are taxed as normal income based their (market) value when they vest. If the recipient keeps the shares of stock that they receive, then any gains they make from that point are taxed as capital gains. For taxation purposes (for the recipient) it is much the same as if they had been paid cash in the amount of the value of the stock they received.

For example purposes: If someone has RSUs that vest at a value of $1 million, they owe taxes on that $1 million as though it were ordinary income. If they then hold on to the shares and sell them when they are worth $1.5 million, they owe more taxes - at the capital gains rate - on the additional $500,000 they've made. It's the same situation as it would be if they had originally been paid $1 million in cash and used it to buy $1 million worth of the stock and then held it until it was worth $1.5 million.

Further, typically when the RSUs vest the company withholds a portion of the shares (which the recipient gets when they settle the RSUs) roughly equivalent to the amount of taxes the recipient might owe on that award. So the parallels with being paid cash rather than with RSUs continues. If you were paid $1 million in cash, you'd effectively have less than that amount available to buy stocks with - much of it would go to paying the taxes on the income. (Of course, you might have plenty of other money to pay the taxes with or which you could use to buy stock.) The same is true with the RSUs as you don't end up with $1 million worth of stock, much of it goes to paying the taxes on it. Even if you don't sell the stock right away or within the same year, you have to pay the taxes on it in the tax year in which the RSUs vested. You either have to use some of the shares awarded to pay the tax or you have to use cash from somewhere else. This is what Mr. Cook has done at times in the past, more than half of the shares that he is awarded are withheld and in addition he comes up with some cash because his effective taxation rate (including state taxes) may end up being so high.

 

[LordVic]

I...

Thank you for that description. And I'm glad that it is being done this way, and if Mr Cook does willingly pay his fair share of taxes, than I am very impressed.

People like to say what they want about Apple products under his watch, But Tim Cook as a human being does come off as a much better leader than those that preceded him

 

[Carnegie]

I have everybody quotes RSUs on the entry price. It is actually delta that matters. They only make money out of RSUs if the price goes up. And they only get a delta between the entry price and the final one.

Although it is a very good idea to vest RSUs when there is a drop

It actually does. Lower the entry price, more the profit. It is all about delta. They are only making money if the shares go up.

I think you are confusing RSUs (Restricted Stock Units) with some other kinds of stock-based compensation, e.g. what are commonly referred to as stock options.

With RSUs, you don't need the market price of the stock to go up to make money. Just having the RSUs vest means making money (unless the stock is worth nothing at that point). Unlike with options where you just have the right to buy shares at a certain price, with RSUs you are being given the shares. Whatever they are worth when they vest is, in effect, what you are being paid.

You of course have to pay taxes on that amount. And, of course, if you want you can hold on to the shares hoping they increase in value, and if they do that means you've made more money. But whatever that delta is it is money that you made in addition to the value of the stock when you received it, meaning the value of the shares when the RSUs vested (and you settled them for shares).

 

[nick42983]

That's the weirdest handshake (grasp?) I've ever seen

 

[dampfnudel]

What is Eddy's award for? Hopefully not Apple Music.

No, he got it for the potential of Apple Music.

 

[Analog Kid]

This is why I'm for the repeal of the 16th Amendment and for the FairTax.

Also, when you look at your paycheck, who gets paid first?
The government.
There is something unholy about that.

Wait, whut? How is the government getting paid first? I get paid every two weeks. I'm pretty sure my company makes quarterly payments to the government, including taxes withheld. Do I have that wrong? Are they making a transfer to the government first, waiting, and then making my direct deposit?

 

[navaira]

"Eddy Cue should be fired!" – half of the forum members
"Brilliant work Eddy, here's some millions" – Apple board

 

[Steve121178]

Total Bull****. Eddy and Tim need to be gone by Q4 2016. They did not earn this from a performance point.

Yes they did.

 

[BoxerGT2.5]

US had a top marginal tax rate of 91% during the 1950s through the early 1960s. Most people would agree the nation and the economy worked pretty well for everyone during that era.

Making a relative handful of people billionaires shouldn't be the objective of an economy. The measure of a society shouldn't be how well do the wealthiest live, the wealthiest will be fine. But rather how well do the poorest live. Objectively things are much worse for a huge slice of society since policies of tax cuts for the wealthiest Americans were established.

At a time when anyone with money had a choice, U.S. or some communist nation or a nation in shambles because it was torn up to shreds post WWII. Times are quite different now in a global economy.

 

[Carnegie]

Thank you for that description. And I'm glad that it is being done this way, and if Mr Cook does willingly pay his fair share of taxes, than I am very impressed.

People like to say what they want about Apple products under his watch, But Tim Cook as a human being does come off as a much better leader than those that preceded him

I agree. Most of us can't know for sure as we don't really know these people, we don't, e.g., live or work with them day in and day out. But Mr. Cook strikes me as a genuinely good person, a class act in a number of ways.

I think you and I have quite different normative views on what makes for proper tax policy, but that's okay - such is the way of the world. We can still agree that Mr. Cook comes across as a decent enough guy.

 

[LordVic]

Wait, whut? How is the government getting paid first? I get paid every two weeks. I'm pretty sure my company makes quarterly payments to the government, including taxes withheld. Do I have that wrong? Are they making a transfer to the government first, waiting, and then making my direct deposit?

There's just an old saying by people who hate taxes that you're "paying the government first" and that (depending on rate), you're essentially working for the the government for free for a period of the year.

Typically the same people who believe the government is big, bad and evil, hate taxes, and want them completely utterly out of their lives, except for you know, building roadways, infrastructure, power grids, helping subsidise their foodstuffs, and making things cheaper / easier for them.

but you know.

Dem big bad guvment

 

[Squeak825]

It actually does. Lower the entry price, more the profit. It is all about delta. They are only making money if the shares go up.

That is not true. You have that wrong. These are not options. These are RSU's. There is no strike price. They are being given the complete value of the stock. The price of the shares when they sell it is 100% profit to the receiver.