Foregoing dividends
I am not sure why this is suddenly news (this was announced months ago), but it has been making the rounds today that Tim Cook, CEO at some company… o I can’t remember… anyway… Tim Cook will be foregoing dividends on the restricted stock units that he received from Apple. Given Apple’s plans to begin paying a dividend, this means Cook we not earn approximately $75 million.
A fundamental relationship in finance is that between shareholders and managers. This an agency problem where the managers act as agents on behalf of shareholders, the principals. Poorly governed firms frequently have managers that expropriate funds for themselves. A particular form of this is known as tunneling, where managers that own shares distribute cash from the firm to themselves to the detriment of the firm. I am sure Cook decided to exclude himself from receiving the dividend to avoid the perception that Apple only began paying a dividend to line his pockets. Good move. It illustrates the fact that Apple may have great corporate governance despite rumors to the contrary.