Apple’s Executives Have This New Rule to Follow
Apple (NASDAQ:AAPL) executives must hold triple their base salary in company stock, according to a new rule the iPhone maker introduced earlier this month and was detailed in a corporate governance notice on its website. The requirement was implemented on February 6, according to The Wall Street Journal.
Executive officers will have five years to satisfy the requirement. The company’s chief executive officer would have to hold 10 times the annual base salary, while board directors would need to hold five times their annual retainer.
The rule is extremely interesting because the company recommended investors oppose a very similar measure proposed by an individual shareholder at the annual meeting this week. That proposal was supported by the California Public Employees’ Retirement System, the biggest U.S. public pension fund, but failed to pass after garnering only 29.7 percent of the tallied votes. The measure was introduced by corporate governance advocate James McRitchie, who asked that Apple executives retain 33 percent of shares acquired through pay-equity programs “until reaching normal retirement age.”
But through its proxy for the meeting, Apple asked shareholders to vote against the measure because it had the potential of “undermin[ing] the company’s ability to attract and retain executives” while providing “no benefit to the company”…
Other portions of Apple’s meeting proxy entered the limelight as well over the past few weeks. Hedge fund manager David Einhorn dragged the company to court over a proposal to limit issuing preferred stock options. Apple was forced to take the measure off the table after losing the legal battle, even though it defended the idea by saying it was designed to give more power to shareholders.
The company has been facing some heat from shareholders who want more of its $137 billion in cash holdings to be diverted to them. The debate has come amid some torrid months for Apple’s stock, which has fallen more than 35 percent in value since reaching a record high in September.
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