8-KLeadership Changes

Apple Inc. 8-K Report, Executive Changes (May 24, 2012)

Filed May 24, 2012For Securities:AAPL

Summary

This Form 8-K filing by Apple Inc. on May 24, 2012, announces amendments to outstanding unvested restricted stock unit (RSU) awards for employees, excluding the CEO, Timothy D. Cook. These amendments will allow RSU holders to receive 'dividend equivalents' if Apple pays ordinary cash dividends. This change is in response to Apple's previously announced intention to start quarterly dividend payments in the fourth quarter of its 2012 fiscal year. The purpose of these dividend equivalents is to ensure that RSU holders are treated consistently with shareholders and that the original equity-based incentives remain intact. The dividend equivalents will be subject to the same vesting and payment terms as the underlying RSUs, and will be paid in cash or used to offset taxes depending on the employee's domicile. Notably, CEO Timothy D. Cook has requested to forgo these dividend equivalents on his own RSUs, foregoing an estimated $75 million in value.

Key Highlights

  • 1Apple amended outstanding unvested restricted stock unit (RSU) awards for employees (excluding CEO Timothy D. Cook) to include dividend equivalents.
  • 2These dividend equivalents will be granted if Apple pays ordinary cash dividends on its common stock.
  • 3The change aligns with Apple's previously announced intention to initiate quarterly dividend payments in Q4 FY2012.
  • 4The dividend equivalents are intended to preserve the equity incentive value for RSU holders and treat them consistently with shareholders.
  • 5Dividend equivalents will follow the same vesting and payment terms as the underlying RSUs.
  • 6CEO Timothy D. Cook will not receive dividend equivalents on his RSUs, waiving an estimated $75 million.
  • 7The dividend equivalents will be paid in cash or used to offset employee taxes, depending on the employee's domicile.

Frequently Asked Questions

The main purpose of this filing is to inform investors about the amendment to Apple's restricted stock unit (RSU) awards. These amendments will allow employees (excluding the CEO) to receive 'dividend equivalents' on their unvested RSUs if the company begins paying cash dividends.

Apple is introducing dividend equivalents to ensure that employees holding RSUs are treated consistently with shareholders when the company starts paying dividends. It's also intended to preserve the intended equity-based incentive value of these awards, as RSUs would not otherwise receive dividends.

No, Timothy D. Cook has specifically requested not to receive dividend equivalents on his restricted stock units. He will be foregoing an estimated $75 million in dividend equivalent value over the vesting periods of his RSUs.

The dividend equivalents will be credited to each RSU award at the time Apple pays an ordinary cash dividend. These credited amounts will be subject to the same vesting, payment, and other terms and conditions as the underlying unvested RSUs to which they relate.