Blogs & Comment

Did Apple's Tim Cook forgo $75 million as a matter of principle?

Apple's CEO is passing up a huge dividend payday. Did he do it from a sense of honour?

Apple CEO Tim Cook (Photo: Valery Marchive/LeMagIT/Wikimedia)

There’s tone at the top, and then there’s tone at the top of the top. And when it comes to defining “top,” it’s hard to beat being the highest-paid CEO in the world, leading the most valuable company in the world. The man who occupies that post, of course, is Apple Inc.’s Tim Cook.

And recently, Cook made a pretty big move that might well do something to set the tone among high-end CEO’s. According to SEC filings, Cook reportedly has opted to take a pass on dividends he could have collected on over a million unvested shares. In total, that amounts to passing up about US$75 million. Not that this is hardly going to leave Cook in the poorhouse—he’s paid a mind-boggling amount of money for the task of trying to fill Steve Jobs’s shoes. But still, it’s not trivial either. What should we make of it?

There are a couple of ways to think about this.

One has to do with shareholder confidence. Some have suggested the decision is designed to show that Apple’s recent decision to pay a dividend wasn’t intended to benefit Cook himself. It is good for the investing public to know that the company is making decisions about things like dividends with the best interests of shareholders in mind, rather than the best interests of the CEO. But then, Apple isn’t exactly suffering a crisis of shareholder confidence. If boosting the image of the company’s leadership is what you’re looking for, this might just be overkill.

But there’s another way to think of this, and that has to do with the good old-fashioned notion of honour. Call me a hopeless romantic, but I like to think that Cook’s decision might have something to do, as an unnamed source told the Telegraph, with setting an example for his fellow CEOs. Executive compensation has been in the spotlight almost continually for the last couple of years, and has even been the focal point of shareholder revolts. Maybe this is Cook’s way of saying, ‘Look, a high-end CEO doesn’t always have to squeeze every penny he can out of the company.‘ And I think it’s entirely plausible that someone like Cook might make that decision—and send that signal—as a matter of principle.

“Honour” is the right moral category here because forgoing the cash is not something Cook is ethically obligated to do. He is fully within his rights, both legally and ethically, to take the dividend like other shareholders. But there’s arguably something good, something admirable, about attempting to shift the tone among high-end CEOs this way. It’s one thing to say that CEOs are overpaid. It’s quite another to set an example.

Will Cook’s move have any impact? Who knows. But it does seem like one more interesting attempt by the folks in Cupertino to get someone to “Think Different.”