Summary
This 8-K filing from Apple Inc. announces a significant change to CEO Timothy D. Cook's outstanding restricted stock units (RSUs) awarded in 2011. Effective June 21, 2013, a portion of Mr. Cook's award has been modified to incorporate performance-based vesting criteria, specifically tied to Apple's relative Total Shareholder Return (TSR) compared to companies within the S&P 500. This move aligns Mr. Cook's compensation more closely with company performance and reflects a broader shift by Apple to include performance elements in future executive stock awards. The modification was driven by shareholder feedback and Apple's ongoing commitment to enhance corporate governance. While the original award was entirely time-based, 50% of the annual RSUs are now subject to forfeiture if certain relative TSR thresholds are not met. Importantly, this modification introduces downside risk for the CEO but does not include an upside opportunity for overachievement. The change does not alter the original grant date fair value for accounting purposes.
Key Highlights
- 1Apple Inc. modified CEO Timothy D. Cook's 2011 RSU award to include performance-based vesting tied to relative Total Shareholder Return (TSR).
- 2This change aligns a portion of CEO compensation with company performance, a move influenced by shareholder feedback.
- 350% of the annual RSUs are now at risk, subject to forfeiture if Apple's relative TSR performance falls in the bottom third of the S&P 500.
- 4The modification introduces downside risk for Mr. Cook but no upside opportunity for overachievement.
- 5Apple plans to incorporate performance elements into future equity awards for its executive officers.
- 6The modification does not change the original grant date fair value of the award for accounting purposes.
- 7The relative TSR measurement period for vesting tranches will gradually increase from one year to three years.