Apple Chief Executive Tim Cook will have to work hard to keep the value of the company from declining. His stock award worth more than $413 million is now subject to the performance of the shares. This was the result of the discussions the company held with its biggest shareholders.
Cook has seen Apple’s share price drop 42 percent since the high of $705 in September. He approached the board to implement a performance criteria on his stocks, according to a filing Friday. Under the new system, a portion of Cook’s stock grant is subject to Total Shareholder Return, which is a measure of Apple’s stock performance and dividends based on S&P data.
In January 2012, the company’s board gave Cook one million restricted stock units to show their confidence in Cook after Steve Jobs gave him the CEO position in August 2011. The filing stated that during Apple’s discussion with most of its largest shareholders, they said that it is appropriate to implement performance criteria to part of future executive stock awards. In the past, the stock award is based in the length of service. Apple started including a performance criteria in new stock awards to top executives Friday.
Apple’s shares dropped out of favor last September due to the uncertainty regarding the company’s ability to fend off competition from rivals such as Amazon, Google and Samsung. The company has gone through one of its longest product droughts during Cook’s leadership. The last device the company launched was the iPad mini last October. It was the first new product Apple launched under Cook.
Before it was changed, Cook’s stock award was previously based on time-based vesting schedule of 10 years. Now a block of 100,000 shares each will vest in 2016 and 2021. The remaining 800,000 shares will vest equally each year and will be subject to the performance criteria.