Apple takes top two spots in Equilar chart

Silicon Valley companies have long used restricted-stock units and other "equity grants" either as rewards and compensation or as incentive to improve the value of a company. During the dot-com boom of the late 90s, stock options and other similar perks were common. The Wall Street Journal reports on a study by compensation-research firm Equilar that shows that Apple has ended up granting two of the largest equity grants in the history of tech companies.

The survey looked at at equity grants given to executives of Silicon Valley tech companies from the year 2000 to the beginning of this month. The top two spots -- and significantly larger awards than almost any other company -- belong to Apple.

The largest by far in terms of full-term value -- more than double any other award -- occurred in 2000 when the Apple board granted then-CEO Steve Jobs a total of 40 million shares in stock options, which are not to be confused with actual stock. Stock options are the opportunity for the awardee to purchase stock at a reduced rate (compared to then-current market value) in a given time frame, at the awardee's own expense -- but since the stock is usually worth more than the discounted rate at the time the options vest, they are treated as a form of compensation.

Despite the controversy the grant generated at the time, Jobs never actually exercised the options, which were then retired and replaced by a grant of restricted stock units (RSUs) in 2003. RSUs are actual stock that is given to an executive with certain conditions attached -- in the case of the recent awarding of one million RSUs given to Tim Cook upon his promotion, the board stipulated that Cook doesn't receive any of it until he has been in the CEO job for five years, whereupon he gets half of the shares. The remainder will be given to Cook on his tenth anniversary as CEO, and the entire award is contingent on him staying with Apple.

Despite the gifts of stock granted to Jobs, he has not sold a single share of stock he holds in Apple since 1997, and all the options awards given him over his tenure as CEO were all retired without Jobs acting on them. The 40 million stock options, had Jobs acted on them when they vested, would have been worth $671 million, Equilar estimates.

Cook's more recent award of RSUs are currently estimated to be worth $376.2 million based on Apple's current stock price -- though that amount will change when the award actually vests in 2016 and 2021. Cook's award is second only to Jobs' in the chart (reprinted below).

Interestingly, nine of the 10 largest equity grants were made in 2000 and 2001, the height of the dot-com boom. Quite a number of the awards were either retired after the bubble burst, or ended up being "underwater" -- worth less than the price the option vested for. Equilar's list does not track how much money executives actually got out of the awards, if any, but only what they would have been worth at term.

Third place in the list went to Gregory Reyes, then-CEO of Brocade Communications, who was granted 4.8 million shares in stock options in 2000 which would have been valued at $337 million. Reyes never actually cashed out the options and was ultimately convicted in a options-backdating scandal.

The rest of the list involves several companies that no longer exist, such as Thomas Seibel of Seibel Systems (a potential $207 million to land in fourth place on the list, the company was acquired by Oracle); a possible $191.7 million for the CEO of Veritas, which was later purchased by Symantec; and two grants to Cisco Systems CEO John Chambers that both ended up "underwater." [via The Wall Street Journal]

by MacNN Staff