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Apple greets new retail guru Ahrendts with up to $78 million in stock awards

Gregg Keizer | May 7, 2014
Apple awarded new retail chief Angela Ahrendts stock grants that, if fully vested, would be worth as much as $78.5 million at Monday's closing price, according to SEC filings.

Angela Ahrendts, former CEO of Burberry, is the new head of Apple's retail and online stores. Analysts expect her to lead a brick-and-mortar store expansion in Asia. (Image: Apple.) Apple last week awarded new retail chief Angela Ahrendts stock grants that, if fully vested, would be worth as much as $78.5 million at Monday's closing price, filings with the U.S. Securities and Exchange Commission (SEC) showed.

Ahrendts, former CEO of the Burberry clothing company, was named Apple's new head of retail and online stores in October 2013, but did not begin her stint at Apple until May 1.

The biggest part of the 113,334 restricted stock units (RSUs) slated for Ahrendts — 96,031 shares, or 85% of the total, worth $57.7 million at yesterday's closing price — will vest over the next four years. The vesting is heavily front-loaded, with nearly $10 million to be handed to Ahrendts on June 1, with other large chunks shifting to her control in April-July 2015 and May-June 2016.

Like all such awards, Ahrendts must still be employed by Apple on a given vesting date to receive the designated RSUs.

Ahrendts' award was actually smaller than her predecessor's. When Apple hired John Browett, CEO of a struggling British electronics chain, in early 2012 to run its retail operation, the company gave him 100,000 RSUs. At the time they were issued, those shares had an on-paper worth of $58.7 million.

Browett was able to cash in on just 5,000 shares, as he was ousted later in 2012 during a reshuffle of Apple's top tier. The retail spot had been empty until Ahrendts' hiring.

Ahrendts will also receive a separate package of RSUs, totaling 17,303 shares, between 2015 and 2017. However, those grants were listed as "targets" that could be reduced to zero or, on the other end of the spectrum, as much as doubled, depending on Apple stock performance between May 1, 2014, and April 30 of 2015, 2016 and 2017.

How much Ahrendts receives will be based on "total shareholder return" (TSR), a combination of share price appreciation and dividends. If Apple outperforms the S&P 500 average in TSR, she will presumably receive the target RSUs, while an extraordinary performance could double the RSUs scheduled to vest that year. If Apple's TSR compares poorly, the RSUs will be reduced.

At the target number of RSUs, the TSR-tied compensation would be worth $10.4 million over the three years. If they were doubled, Ahrendts would pocket $20.8 million before taxes.

CEO Tim Cook and other top Apple executives have similar plans in place.

Ahrendts was hired, analysts said last year, to revitalize and revamp Apple's retail business, and to expand its footprint in Asia, where the company has booked record sales but has only a few brick-and-mortar stores. Apple has just 10 stores in China, for example, and only 20 spread between China, Hong Kong and Japan.

 

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