W14736 APPLE: CORPORATE GOVERNANCE AND STOCK BUYBACK1 Professor Won-Yong Oh and Seoyeon Park wrote this case solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. This publication may not be transmitted, photocopied, digitized or otherwise reproduced in any form or by any means without the permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) cases@ivey.ca; www.iveycases.com. Copyright © 2015, Richard Ivey School of Business Foundation Version: 2015-03-27 At the end of 2013, Carl Icahn, an activist shareholder who had invested a significant amount in Apple’s stock, proposed a more than US$50 billion2 share repurchase program during the 2014 fiscal year. If this proposal was approved at the annual shareholder’s meeting, Apple would be in a position to buy back a significant portion of its own shares on the stock market, which would drive up the stock price. However, Apple’s executives and board of directors opposed Icahn’s proposal and recommended that shareholders vote against it. As of the end of December 2013, there were 892,553,950 shares, held by 26,522 shareholders.3 Apple’s annual shareholder’s meeting was scheduled to be held on February 28, 2014. Shareholders could either vote for Icahn’s proposal or follow the recommendation of Apple’s board. COMPANY OVERVIEW4 Apple was incorporated in California in January 1977, with the original name of Apple Computer, Inc. Apple’s business areas included mobile communication and media devices (e.g., iPhone, iPad), personal computers (e.g., Mac), portable digital music players (e.g., iPod), various related services, software (e.g., iOS, OS X, iTunes Store, App Store and iCloud) and peripherals (e.g., Apple TV). Apple’s key strength lay in its unique computing ecosystem, iOS, rather than its superior hardware; iOS provided users with an integrated and seamless experience across multiple devices.5 Apple sold its products and services worldwide through its retail stores in 13 countries, as well as in online stores, through direct sales forces and through third-party retail channels (e.g., cellular network carriers and other wholesalers and retailers). 1 This case has been written on the basis of published sources only. Consequently, the interpretation and perspectives presented in this case are not necessarily those of Apple Inc. or any of its employees. 2 All currency amounts are shown in U.S. dollars unless otherwise noted. 3 Company proxy statement (2014), p. 4. 4 Ibid., pp. 1-5. 5 RBC Capital Markets, “Apple, Inc.: Adjusting Estimates To Reflect Buyback and $12B Debt Raise,” Equity Report, May 5, 2014. This document is authorized for use only in COOP HEC's 20225A-H23-Ethics and Regulation in the Investment Industry at HEC - Montreal from Dec 2022 to May 2023. Page 2 9B14M165 Apple’s strategy was well known for its strong emphasis on a positive user experience through innovative hardware, software and services, and its historical financial performance was well above the industry average (see Exhibit 1). The markets for Apple’s products and services were very competitive, characterized by the frequent introduction of new products and by rapid technological advancement and innovation. The industry within which Apple had been competing included many large, well-funded and skilled competitors, such as Samsung. Given that the industry was characterized by high competition based on technological development, Apple’s future success relied heavily on the continuous introduction of competitive products, services and technologies to the market. The company continued to invest in research and development (R&D) in order to enhance its existing products and to expand its new product offerings. Total R&D expenditure was $6.0 billion, $4.5 billion and $3.4 billion in 2013, 2012 and 2011, respectively.6 While Apple clearly possessed some key strengths, including strong market positions with innovative products, a clear and simple marketing plan and a higher margin structure, analysts expressed some concerns about its weaknesses. The iPhone was no longer considered a cutting-edge product, and the strategy of targeting the premium market segments, rather than the mass market, limited the company’s growth potential. Finally, a high dependence on a few core products (iPhone and iPad) and a relatively weak position in the corporate sector represented some of Apple’s weaknesses as well (see Exhibit 2). Annual Meeting7 The annual meeting agenda contained 11 items for discussion, including four items initiated by a shareholder’s proposal, which were listed on the company’s proxy statement (i.e., SEC form DEF 14A). These items included the election of board members, the appointment of accounting firms, the approval of executive compensation and a decision on the stock buyback program proposed by major shareholders. Also, the board members provided voting recommendations for these items, based on their judgment as to whether each proposal aligned with the shareholder’s interest (recommend ‘for’) or not (recommend ‘against’). Icahn’s proposal of stock repurchase was item No. 10, entitled “Shareholder proposal of a nonbinding advisory resolution relating to the company’s capital return program,” and the board had recommended that shareholders vote against this proposal. Shareholders could vote for or against Icahn’s proposal of the stock repurchase program. Their task, then, was to judge whether Icahn’s proposal or the board’s recommendation (i.e., to vote against the proposal) would be beneficial to shareholder interests. Looking at the existing corporate governance characteristics constituted an initial and important step, one that shareholders could not take lightly. APPLE’S CORPORATE GOVERNANCE There were three important entities related to corporate governance: corporate executives, shareholders and the board of directors. In addition, setting an appropriate executive compensation represented an important item for discussion at the annual meeting because it could affect the incentives of executives. 6 7 Company annual report, 2014, p. 7. Company proxy statement, 2014, pp. 1-2. This document is authorized for use only in COOP HEC's 20225A-H23-Ethics and Regulation in the Investment Industry at HEC - Montreal from Dec 2022 to May 2023. Page 3 9B14M165 Corporate Executives: People Who Manage the Company Apple’s senior management team consisted of eight executives, including chief executive officer (CEO) Tim Cook and seven senior vice-presidents. Since August 2011, Tim Cook had served as CEO, having previously held the position of chief operating officer (COO) since October 2005. Cook had joined the company in March 1998 and worked as executive vice-president, Worldwide Sales and Operations from 2002 to 2005. Previously, Cook had served as senior vice-president, Worldwide Operations, Sales, service and support (from 2000 to 2002) and as senior vice-president, Worldwide Operations (from 1998 to 2000). Outside of Apple, his previous appointments included serving as director of the National Football Foundation & College Hall of Fame, Inc.8 Other senior executives from Apple included the following:9 Eduardo Cue, senior vice-president, Internet Software and Services Peter Oppenheimer, senior vice-president and chief financial officer Craig Federighi, senior vice-president, Software Engineering Daniel Riccio, senior vice-president, Hardware Engineering Philip Schiller, senior vice-president, Worldwide Marketing Bruce Sewell, senior vice-president, General Counsel and Secretary Jeffrey Williams, senior vice-president, Operations Ownership Structure: People Who Own the Company Apple had attracted a number of major institutional shareholders to its roster (see Exhibit 3). Executives and directors also possessed shareholdings (see Exhibit 4), a situation that was referred to as “insider ownership.” The total number of shares owned by 15 executive officers and directors as a group was 567,949, which represented less than 1 per cent of outstanding shares of the company’s common stock. In August 2013, Carl Icahn, who owned roughly $1 billion worth of Apple shares,10 approached Tim Cook and discussed the stock repurchase program. According to Icahn, the pair “discussed my opinion that a larger buyback should be done now. We plan to speak again shortly.” Icahn believed that Apple was significantly undervalued.11 However, even before Icahn’s proposal, Apple was engaged in a major stock buyback program. In March 2012, the board authorized a quarterly dividend and stock buyback program worth of $45 billion. In April 2013, the company announced that it would double the size of its planned stock repurchase program and dividend payments to $100 billion by the end of 2015.12 8 Company proxy statement, 2014, p.10. Ibid., p.17. 10 David Benoit, “Icahn Ends Apple Push with Hefty Paper Profit,” The Wall Street Journal, February 10, 2014, www.wsj.com/articles/SB10001424052702304558804579374720149630510, accessed September 10, 2014. 11 Aaron Pressman, The Exchange “Icahn’s Plans for Apple Unlikely to Help Long-Term Shareholders,” Yahoo Finance August 19, 2013, http://finance.yahoo.com/blogs/the-exchange/icahn-plans-apple-unlikely-help-long-term-shareholders181943487.html, accessed September 10, 2014. 12 “Apple More than Doubles Capital Return Program,” Apple Press Info, www.apple.com/pr/library/2013/04/23Apple-Morethan-Doubles-Capital-Return-Program.html, accessed September 1, 2014. 9 This document is authorized for use only in COOP HEC's 20225A-H23-Ethics and Regulation in the Investment Industry at HEC - Montreal from Dec 2022 to May 2023. Page 4 9B14M165 Board of Directors: People Who Oversee Executives The board of directors oversaw the top executives, including the CEO, in order to ensure that the firm’s operations were competent, appropriate and ethical and that they aligned with the shareholders’ long-term interests. Apple’s board of directors was composed of eight directors (see Exhibit 5) who were nominated for re-election at the annual meeting each year (i.e., each one served a one-year term). The board comprised a diverse group of people, mostly from the world of business. Most of these individuals held senior leadership positions at large companies, and many of the directors also had experience both as directors of other companies and at highly regarded academic, research, nonprofit and philanthropic organizations. As the only director who was also an employee of Apple, CEO Tim Cook served as a member of the board. Arthur Levinson, chairman of Genentech, Inc., served as the chairman of Apple’s board of directors. According to the company’s proxy statement, “The board also believes the current separation of the chairman and CEO roles allows the CEO to focus his time and energy on operating and managing the company and leverages the chairman’s experience and perspectives.”13 Apple’s board was composed of three committees: an audit committee (chaired by Dr. Ronald Sugar); a nominating and corporate governance committee (chaired by William Campbell); and a compensation committee (chaired by Andrea Jung). Each committee had three or four members, including a committee chairperson, and they operated under written charters adopted by the board of directors. The audit committee had the responsibility of evaluating the financial performance and transactions, appointing the public account firm, assessing the accounting policies and internal control system, reviewing the services performed by public accounting firm, and overseeing enterprise risk management. During 2013, the committee met 10 times. The nominating and corporate governance committee was responsible for evaluating potential nominees (i.e., the director candidates proposed by shareholders) to the board, as well as for assessing the board’s effectiveness in monitoring executives and making recommendations regarding the size, structure and composition of the board and its committees. The committee met four times during 2013, and, at the annual shareholders meeting, it recommended to the full board the re-election of each of the incumbent directors. The compensation committee was involved in reviewing the executives’ compensation, arranging equity compensation plans (e.g., stock options) and overseeing the review of all board members’ compensation. The compensation committee met eight times during 2013. Executive Compensation The compensation committee had the responsibility of deciding the structure of executive compensation (see Exhibit 6). Executives without a proper compensation scheme might not have the incentive to perform in the best interest of shareholders. To help determine the appropriate level and structure, the compensation committee used a group of reference companies, such as AT&T, Amazon, Google, HP, IBM and Microsoft, in order to use them as a peer comparison when deciding on executive compensation. Therefore, the level of Apple executives’ compensation was equivalent to that of other major companies in the United States. In 2013, neither a bonus nor a stock award was given to executives. 13 Company proxy statement, 2014, p. 12. This document is authorized for use only in COOP HEC's 20225A-H23-Ethics and Regulation in the Investment Industry at HEC - Montreal from Dec 2022 to May 2023. Page 5 9B14M165 Interestingly, Steve Jobs, Apple’s former CEO at the time, received only $1 per year as his compensation, but he owned 5.5 million shares of the company’s common stock (worth more than US$1.84 billion as of January 2011). ICAHN’S PROPOSAL: STOCK BUYBACK Due to its successful past performance, Apple was sitting on a huge cash stockpile of $147 billion. Some investors such as Carl Icahn were dissatisfied with the excess-cash situation and wanted Apple to put the cash to work for the company’s shareholders. Since much of Apple’s cash was trapped overseas because of the company’s tax-saving policy, Icahn proposed that Apple should issue bonds and use the money to repurchase shares on the public market. This stock repurchase program would drive up Apple’s stock price, which would in turn increase the shareholders’ stock value, including Icahn’s holdings. On August 13, 2013, Icahn tweeted about his large stake in Apple. He claimed the company was extremely undervalued and urged CEO Tim Cook to consider a stock buyback. Icahn’s action made a significant impact on Apple’s stock price, which surged 5 per cent by close on August 13 and an additional 1.82 per cent the next day. As a result, the stock price finally crossed a psychological threshold of $500. In an interview with CNBC on October 1, 2013, Icahn said, “I feel very strongly about this. I can’t promise you the stock will go up, and I can’t promise you they will do the buyback. But I can promise you that I’m not going away until they hear a lot more from me concerning this [issue].”14 On October 24, 2013, Icahn reinstated his interest in the stock buyback program by disclosing a 4.7 million share position through a letter to Cook, which was made public. Later, Icahn recalled, “Cook’s assistant initially tried to schedule at 5 a.m. Pacific Time. That’s usually when I go to bed! This guy’s tougher to get than the President,” laughed Icahn. Icahn said, “Tim Cook is doing a good job with the business . . . . I think he’s good whether he does what I want or not.” After the conversation with Cook, Icahn said, “We’ve discussed a lot of things, and he asked a lot of questions and really listened.”15 On November 26, 2013, three days before the deadline for measures to be voted on at Apple’s next annual shareholders meeting, Icahn finally filed a $50 billion shareholder proposal, calling for Apple to pay out some of its cash hoard to investors. Again, Icahn emphasized that he was not against the management of the company; however, in an interview with Time Magazine, he said that Apple simply had “too much money on [its] balance sheet . . . . Apple is not a bank.”16 Why Vote for the Proposal? By reducing the number of shares outstanding, the buyback would definitely make a positive impact on Apple’s share price, at least in the short term. Icahn believed that Apple had sufficient borrowing ability to spend $50 billion in a stock repurchase without causing any liquidity problems or compromising its capability to invest in innovation. 14 Connie Guglielmo, “Carl Icahn Wasn’t Joking about That $150 Billion Stock Buyback by Apple,” Forbes.com, www.forbes.com/sites/connieguglielmo/2013/12/04/carl-icahn-wasnt-joking-about-that-150-billion-stock-buyback-by-apple/, accessed September 15, 2014. 15 Rana Foroohar, “Icahn Files Apple Shareholder Proposal,” TIME Exclusive, http://business.time.com/2013/12/04/icahnapple/, accessed September 15, 2014. 16 Ibid. This document is authorized for use only in COOP HEC's 20225A-H23-Ethics and Regulation in the Investment Industry at HEC - Montreal from Dec 2022 to May 2023. Page 6 9B14M165 In addition, Ken Yook, a finance professor at the Johns Hopkins Carey Business School, mentioned that interest on bonds was tax deductible. Also, he pointed out that interest rates remained at a historically low level, even though they had risen recently. Yook said, “Apple should easily be able to sell tens of billions of dollars more bonds . . . . Apple can enjoy the tax shields of debt financing and lower cost of capital, among other benefits, without facing any significant issues.” Icahn said his proposal would call for only slightly more stock repurchase than Apple had already committed to. In an open letter to Apple shareholders, he wrote, “We see no reason to persist with our nonbinding proposal, especially when the company is already so close to fulfilling our requested repurchase target.”17 Why Vote Against the Proposal? Apple’s executives and board had recommended that shareholders vote against Icahn’s proposal. Some other major shareholders, such as the California Public Employees’ Retirement System pension fund, publicly backed this stance. Mark Moskowitz, an analyst at J.P. Morgan, commented: Apple sits on an enviable cash pile, and some of that cash needs to be returned to shareholders over time, which the company already has committed to. We are concerned, however, that Apple’s accelerated stock buyback activity could be in response to some investors focusing too much on capital allocation. We would prefer to see Apple assert a more balanced use of cash, across [mergers and acquisitions], stock buybacks and dividends.18 The problem with Icahn’s proposal was that sizable buyback programs could be a distraction for a hightech company that should be focusing on innovation in new products and services. Gerard Tellis, a professor at the University of Southern California, Marshall School of Business, suggested that this was a matter of “outstanding innovation” versus “financial engineering,” stating that “the growth of Apple’s stock price was driven by outstanding innovation, not financial engineering.” Dr. Arun Sundararajan, professor of information sciences at New York University, echoed this view, saying, “This kind of financial engineering isn’t in the long-term interest of Apple’s shareholders . . . . [Apple is] still a tremendously valuable company, but stock price boosts from financial engineering shouldn’t distract from the fact that [its] business model doesn’t look as solid and dominant as it did four years ago.” Further Justin Pettit, vice-president at IHS Consulting, mentioned, “For a company like Apple, matters of financial policy are very much second-order concerns.”19 Apple had already made a significant effort to increase shareholder returns. In March 2012, the board approved the stock repurchase program of $45 billion, in addition to a quarterly dividend. In April 2013, Apple again authorized a significant increase in the size of the shareholder returns up to $100 billion, raising the dividend and increasing the share buyback authorization to $60 billion.20 17 David Benoit, “Icahn Ends Apple Push with Hefty Paper Profit,” The Wall Street Journal, February 10, 2014, www.wsj.com/articles/SB10001424052702304558804579374720149630510, accessed September 10, 2014. 18 J.P. Morgan, “A Buyback Bonanza: Apple’s Two-Week Buyback Activity Is $14 Billion; We Have a Mixed View,” North America Equity Research, February 7, 2014. 19 Aaron Pressman, The Exchange “Icahn’s Plans for Apple Unlikely to Help Long-Term Shareholders,” Yahoo Finance, http://finance.yahoo.com/blogs/the-exchange/icahn-plans-apple-unlikely-help-long-term-shareholders-181943487.html, accessed September 10, 2014. 20 Company proxy statement, 2014, p. 62. This document is authorized for use only in COOP HEC's 20225A-H23-Ethics and Regulation in the Investment Industry at HEC - Montreal from Dec 2022 to May 2023. Page 7 9B14M165 THE DECISION At the annual meeting in February 2014, Apple shareholders would vote to approve or reject Icahn’s stock buyback proposal. Icahn would have the option of withdrawing his proposal if he and the company could come to an agreement before the annual meeting. Tim Cook and the other senior executives could choose between the options of making an agreement with Icahn or allowing shareholders to vote at the shareholder meeting. If no action was taken before the shareholder meeting, each side could try to persuade shareholders to vote with them. The time had arrived for Apple’s 26,522 shareholders to make a decision. This document is authorized for use only in COOP HEC's 20225A-H23-Ethics and Regulation in the Investment Industry at HEC - Montreal from Dec 2022 to May 2023. Page 8 9B14M165 EXHIBIT 1: APPLE’S FINANCIAL DATA 2013 2012 2011 170,910 156,508 37,037 41,733 Total cash, cash equivalents and marketable securities 146,761 Total assets 207,000 Net Sales Net Income 2010 2009 108,249 65,225 42,905 25,922 14,013 8,235 121,251 81,570 51,011 33,992 176,064 116,371 75,183 47,501 Long-term debt 16,960 0 0 0 0 Total liabilities 83,451 57,854 39,756 27,392 15,861 123,549 118,210 76,615 47,791 31,640 40.03 44.64 28.05 15.41 9.22 39.75 44.15 27.68 15.15 9.08 11.40 2.65 0 0 0 Total shareholders’ equity Earnings per share: Basic Diluted Cash dividends declared per share Note: Unit in millions, except earnings per share and cash dividends per share. Source: Company annual report, 2014, p.23. EXHIBIT 2: SWOT ANALYSIS Strengths Weaknesses Superior historical financial results - High sales growth and operating margins - Strong cash flows High focus on design Brand awareness and reputation Proprietary systems (e.g., OS) Innovative products (MAC, iPad, iPhone, iPod) Skilled manufacturing and distribution networks Higher margin structure (e.g., low R&D, economies of scale) High prices and limited product range Lack of innovation for future products offering High dependence on key products (iPhone and iPad) Relatively weak position in the corporate sector Dependence on product upgrades Lack of product breadth (at different pricing ranges) Opportunities Threats Emerging markets (e.g., China) Product upgrades, generating refresh purchases Increasing corporate demand Wearable gadgets Synergies of products: complementary effects among products Saturation in Smartphone market Increased competition - Android OS and Samsung dominate smartphone market. Rapid product cycles Lawsuits over patent issues (e.g., Samsung) Source: Created by authors. This document is authorized for use only in COOP HEC's 20225A-H23-Ethics and Regulation in the Investment Industry at HEC - Montreal from Dec 2022 to May 2023. Page 9 9B14M165 EXHIBIT 3: MAJOR SHAREHOLDERS PROFILE (AS OF JUNE. 30, 2014) Top 10 Major Shareholders % Shares Shares Change % Shares Change Value of Equity Assets Vanguard Group, Inc. 5.40 323,102,515 -3,905,194 -1.19 1,561,890.55 State Street Global Advisors (US) 4.03 241,237,839 -7,604,496 -3.06 969,364.85 BlackRock Institutional Trust Company 3.77 225,989,756 -11,197,754 -4.72 1,286,241.24 Fidelity Management & Research 3.04 182,282,153 16,434,436 9.91 851,443.21 Invesco PowerShares Capital Management LLC 1.05 62,768,833 -7,010,191 -10.05 78,692.18 TIAA-CREF 0.93 55,575,277 1,973,197 3.68 262,386.61 Icahn Associates Corporation 0.88 52,760,848 0 0.00 36,873.84 T. Rowe Price Associates, Inc. 0.87 51,856,730 -6,934,058 -11.79 501,753.67 Northern Trust Investments, Inc. 0.86 51,566,318 -2,885,198 -5.30 202,671.20 Capital Research Global Investors 0.81 48,589,205 4,762,450 10.87 443,403.34 Note: Filing dates, June 30, 2014. The number of total outstanding shares is 892,553,950 and unit of Value of Equity Assets is $MM. Source: Thompson One Database, accessed October 12, 2014. EXHIBIT 4: SHARE OWNERSHIP BY EXECUTIVES AND DIRECTORS (AS OF DECEMBER 26, 2013) Number of common stock shared Executives Timothy Cook 87,316 Eduardo Cue 3,120 Peter Oppenheimer Daniel Riccio Jeffrey Williams 4,834 12,258 317 Directors William Campbell Millard Drexler Al Gore Robert Iger Andrea Jung Arthur Levinson Ronald Sugar 48,112 1,533 101,920 5,616 22,980 240,040 1,718 Note: The number of total outstanding shares is 892,553,950. Source: Company proxy statement, 2014, p. 19. This document is authorized for use only in COOP HEC's 20225A-H23-Ethics and Regulation in the Investment Industry at HEC - Montreal from Dec 2022 to May 2023. Page 10 9B14M165 EXHIBIT 5: DIRECTOR PROFILES Director Timothy Cook - age: 53 - director since 2011 Profile William Campbell - age: 73 - director since 1997 Millard Drexler - age: 69 - director since 1999 Al Gore - age: 65 - director since 2003 Apple’s CEO since August 2011 Company’s Chief Operating Officer since October 2005 Served as Executive Vice-President, Worldwide Sales and Operations (2002-2005) Joined Apple in March 1998 Chairman of Intuit Inc. (“Intuit “) since August 1998 CEO and director of Intuit (1994-1998) Director of GSV Capital Corp. (since October 2012) and the National Football Foundation & College Hall of Fame, Inc. Chair of the Board of Trustees of Columbia University Chairman and CEO of J.Crew Group since January 2003 President and CEO of The Gap (1995-2002), director of The Gap (1983-2002) Director of Warby Parker since 2013 and Teach for America since 2011 Chairman of Generation Investment Management since 2004 Partner of Kleiner Perkins Caufield & Byers since 2007 Chairman of The Climate Reality Project U.S. House of Representatives (four times), U.S. Senate (two times), Vice-President of the United States (served two terms) Executive Chairman of Current TV (2002-2013) Robert Iger - age: 63 - director since 2011 Andrea Jung Senior advisor to the board of directors of Avon Products, Inc. Executive chairman, Avon (2012) Chairman of the board of directors and CEO, Avon (2001-2012) Member of the supervisory board of Daimler AG since April 2013 Director of General Electric Company since 1998 Member of the New York Presbyterian Hospital Board of Trustees. Chairman of the board Chairman of Genentech, Inc. (“Genentech”) since September 1999, CEO of Genentech (1995-2009) Director of the Roche Holding Ltd. since March 2010 Chairman of the board of Amyris and a director of NGM Biopharmaceuticals, and the Broad Institute of Harvard and MIT. Dr. Ronald Sugar - age: 65 - director since 2010 Retired chairman of the board and CEO of Northrop Grumman Corporation (“Northrop Grumman”) (2003-2010) President and chief operating officer, Northrop Grumman (2001-2003) Director of Air Lease Corporation since 2010, of Amgen Inc. since 2010, and of Chevron Corporation since 2005. - age: 55 - director since 2008 Arthur Levinson - age: 63 - director since 2000 Chairman and Chief Executive Officer of The Walt Disney Company (Disney) since March 2012 President and CEO, Disney (2005-2012) President and COO, Disney (2000-2005) Director of the National September 11 Memorial & Museum, the Lincoln Center for the Performing Arts, and the U.S.-China Business Council Source: Company proxy statement, 2014, pp. 10-12. This document is authorized for use only in COOP HEC's 20225A-H23-Ethics and Regulation in the Investment Industry at HEC - Montreal from Dec 2022 to May 2023. Page 11 9B14M165 EXHIBIT 6: EXECUTIVE AND DIRECTOR COMPENSATION (YEARS 2013, 2012, 2011) Executives Year Salary Bonus Stock award Non-equity incentive plan All other comp. Total ($) Timothy Cook 2013 1,400,006 ‒ ‒ 2,800,000 52,721 4,252,727 CEO 2012 1,357,718 ‒ ‒ 2,800,000 17,274 4,174,992 2011 900,017 ‒ 376,180,000 900,000 Peter Oppenheimer 2013 866,061 ‒ ‒ 1,750,000 Senior Vice-President 2012 805,400 ‒ 66,169,750 CFO Eduardo Cue 2011 700,014 ‒ ‒ 2013 866,061 ‒ Senior Vice-President 2012 805,400 2011 607,704 ‒ 51,852,000 2013 866,061 ‒ Jeffrey Williams 2013 866,061 ‒ Senior Vice-President 2012 Daniel Riccio 16,520 377,996,537 16,791 2,632,852 1,600,000 16,412 68,591,562 700,000 16,129 1,416,143 ‒ 1,750,000 31,044 2,647,105 ‒ 47,975,262 1,600,000 39,753 50,420,415 444,615 48,656 52,952,975 ‒ 1,750,000 16,791 2,632,852 ‒ 1,750,000 16,791 2,632,852 805,400 ‒ 66,269,800 1,600,000 16,412 68,691,612 Fees paid in cash Stock award Senior Vice-President Directors All other compensation Total ($) William Campbell 65,000 249,848 823 315,671 Millard Drexler 50,000 249,848 5,969 305,817 Al Gore 50,000 249,848 3,918 303,766 Robert Iger 50,000 249,848 5,341 305,189 Andrea Jung Arthur Levinson Ronald Sugar 70,000 249,848 6,444 326,292 250,000 249,848 8,365 508,213 75,000 249,848 1,984 326,832 Source: Company proxy statement, 2014, pp.16 and 33. 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