Because check it out, soft rockah! Piper Jaffray’s Gene Munster’s got the low-down on the next couple of years for Apple and, if these numbers don’t lie, they are going to softly jostle your sawks!
Among Munster’s predictions:
Revenue growth slowing from 82% the June 2011 quarter to 20% in 2013.
The consensus among investors he polled was that growth would slow even more dramatically in 2013, to 10%.
Whoa. Really? Because as Philip Elmer-Dewitt points out, it’s been kind of a while since it’s been that low. Are investors thinking that because of the economy; or because Tim Cook doesn’t look as good in a mock turtleneck, jeans and Nikes; or because they’re just angry about something completely unrelated?
If it’s a vote of meh-confidence in Tim Cook, it’s one that’s not shared by Apple’s board, which voted to give the guy a million shares rated “R” for “restricted.” This has caused a bit of a furor in certain circles. Specifically, the circles of armchair boards of directors.
It was the 2nd largest grant in US corporate history according to Equilar. Second only to one received by Jobs 11 years ago worth $600 million.
Aaron Boyd of Equilar said: “Apple has done quite well recently with Cook in charge, but you’d still be surprised no matter who was getting it.”
That seems like a lot. Except, it’s all relative really. Jobs was arguably the best CEO in the U.S. (if not the world) in terms of providing shareholder value over the last 14 years—Cook is arguably the second best.
Nell Minow, a board member of Governance Metrics International, said: “The Apple board has a consistent record of making bad choices with regard to incentive compensation.” She went on to say the problem with the award is not its size so much as its form, because it only has upside and no downside.
It would be more correct to say that the Apple board has a history of making market-competitive choices with regards to incentive compensation. The Macalope was critical of Apple’s handling of the Steve Jobs’s stock options mess back in the day. (Is 2006 long ago enough to be considered “back in the day”? What’s the statute of limitations on that?). But it wasn’t illegal or uncommon to backdate options. The problem was the failure to disclose the backdating.
The shares Cook has been granted are not options, though. The company’s just giving them to him when they vest. Options are a better way of tying performance to compensation, but he does still have the incentive of trying to make the stock go up over the long haul, since the vesting dates are five and ten years out.
“That’s a nice, big, fat round number,” [Scott Adams, coordinator of the public pension program at the American Federation of State, County and Municipal Employees] said. “It’s a lot of money, and we don’t know if he’s worth it or not.”
It’s also a big, fat opportunity cost. Having helped turn Apple into the largest and most successful company in America, Cook could pretty much be running any company he wants. Apple paid him to keep him. Realistically, you couldn’t put just any yahoo—like, say, the CEO of Yahoo—in charge of Apple. We played this game six weeks ago and it wasn’t very much fun.
The Macalope’s not a fan of out-of-whack executive compensation, so he’s not going to defend the overall number, but he will defend the number relative to other executives. Doesn’t it seem like there’s a bigger problem than rewarding a star like Cook—such as executives who get paid generously despite completely screwing up a company?
If Apple’s growth crashes to a mere 10 percent, then the detractors might be right. The Macalope doesn’t see that happening, though.
(Disclosure: the Macalope hold an insignificant number of Apple shares.)
[Editors’ Note: In addition to being a mythical beast, the Macalope is not an employee of Macworld. As a result, the Macalope is always free to criticize any media organization. Even ours.]