Apple CEO Tim Cook sells large amount of stocks after two years, does Apple's future raise concerns?

According to documents submitted to the U.S. Securities and Exchange Commission (SEC), Apple CEO Tim Cook sold 511,000 shares of Apple stock, with a pre-tax value of approximately $87.8 million and a post-tax gain of $41.5 million, marking his largest sale in two years. Following this sale, Cook still holds around 3.28 million shares of stock, valued at approximately $565 million, accounting for 0.02% of the total outstanding shares of 15.6 billion.

Tim Cook Sells Stocks, Is Apple's Future in Doubt?

According to SEC documents, this transaction was carried out in accordance with a 10b5-1 trading plan. In the capitalist United States, generous stock incentive systems are commonly used to attract and retain top executives such as CEOs, with stock options being the most common method. Companies typically set standards and deadlines for these executives to acquire company stock options at a low price as a way to gain ownership in the company if they perform well.

Previously, there was discussion about Coinbase CEO Brian Armstrong selling stocks before a lawsuit, raising questions about insider information. However, the U.S. has strict regulations regarding stock sales by company insiders. The SEC's Rule 10b5-1c is designed to prevent insider trading based on material nonpublic information. The selling plan must be established or modified at least 90 days in advance to avoid potential SEC charges or lawsuits.

Therefore, Cook's stock sale is not directly related to Apple's recent stock performance.

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Apple CEO Cook's Incentive Plan

The documents also detail Cook's incentive plan, which is based on Apple's stock performance from 2021 to 2023. This explains why Cook is selling a large amount of stock again after a two-year hiatus. The incentive plan is as follows:

Comparison Base Period: First day of the 2021 fiscal year vs. last day of the 2023 fiscal year

Comparison Object: Total Shareholder Return (TSR) of other companies in the S&P 500 Index

• If Apple's relative total shareholder return ranks in the top 85% or above among S&P 500 Index companies during the performance period, 200% of the target shares will be granted
• If performance ranks above 55%, 100% of the target shares will be granted
• If ranking is in the top 25% or above, 25% of the target shares will be granted
• If ranking is below the top 25%, no shares will be granted

Apple's total shareholder return over the three-year performance period is 54.09%, ranking 141st among the 480 companies in the S&P 500 Index, at 70.77%. Therefore, 511,000 shares that meet the performance requirements have been allocated to Cook's trust account.

Apple Stock Price Falls from Highs, Investors Worry About Slower Demand Recovery Than Expected

Apple recently launched the new iPhone 15 series, but faced overheating issues. Coupled with investor concerns about slower-than-expected recovery in smartphone demand, the company's stock price has fallen 12% from its historical high of $198.23 in July to $174.91 as of yesterday.

After this sale, Cook still owns approximately 3.28 million shares of stock, valued at around $565 million. However, this only accounts for 0.02% of the total outstanding shares of 15.6 billion, which is not significant enough to impact the stock price of such a large company.