Today I opened up my Apple Inc. (NASDAQ:AAPL) shareholder proxy vote email. I was taken back to see a few of the proposals we have to vote on as shareholders. Here are two that stand out:
A NON-BINDING ADVISORY RESOLUTION TO APPROVE EXECUTIVE COMPENSATION.
On its own maybe not troubling but next was this more insidious proposal:
A SHAREHOLDER PROPOSAL ENTITLED “EXECUTIVES TO RETAIN SIGNIFICANT STOCK.”
Huh? Why is this one so troublesome? Well in companies that we Fool’s like to invest in we prefer to see executives and insiders owning significant stakes in their company. If they have no skin in the game their interests are not aligned with the shareholders.
So this got me thinking. I had also wondered why Apple Inc. (NASDAQ:AAPL) did not issue a special dividend before 2012 ended to help many avoid the tax hike. They also did not even push up the Q1 dividend payable date so it would be taxed at the lower 2012 rates. This move would not have even cost them anything. Why would management and the board not do this? It made no sense to me. Don’t they care? Well if they owned shares they would care right? So I took a look at some upper level executives holdings and board members. The facts are disturbing if you are an Apple shareholder.
You can view the insider roster at the link below. I have pulled out some highlights.
Tim Cook – 13,817 shares. Really? This is all Cook held onto? He dumped all his options when they vested back in March netting over 120 million dollars.
Eddy Cue – 285 shares. He follows the pattern of exercising vested options and dumping them all. Nice to see these execs holding onto stock, right?
Phil Schiller – 257 shares held. Such conviction in his company! Dumped his 120k shares March 12 for $70 million. But hey he continues to hold about $125 thousand worth!
Daniel Riccio – 0 shares (not a typo). Dumped $14 million worth of stock in ’12. Holds zilch
Peter Oppenheimer – 4793 shares owned. That’s not much. he dumped 150k shares for $90 million in march.
Robert Mansfield – 12,548 shares owned directly and 17,000 indirect for total of 29,548. Dumped $50 million plus in stock.
As you can see the board members and executives are not holding significant long stakes in Apple Inc. (NASDAQ:AAPL) stock and some have no stake whatsoever. I even wonder why Cue and Schiller kept their 257 and 286 shares? You can get an annual report with one share, right?
As an Apple shareholder this is a troublesome attitude the insiders have towards their own stock. Furthermore they’re only buying back $3.3 billion per year to offset option dilution. This is the dilution caused by the options they are granting and flipping in their entirety without holding any of the shares long.
Will Tim Cook and his team belly up to the bar with their shareholders and plunk down some of their own cash to own Apple Inc. (NASDAQ:AAPL)? Will they decide to put some skin in the game so their fortunes are aligned with yours? So far this is not the case and the proxy vote proposal coming up at the shareholder meeting where they want you to vote against the proposal so they can continue to keep their own skin out of the game is of major concern.