Wednesday 11 April 2012

Millionaire Employees of Apple

Apple employees, under the Apple Employee Stock Purchase Plan (ESPP) would be millionaires today (April 2012) if they had contributed to a maximum of $25,000 per year over a preceding seven year period. In fact they would have an investment worth $1,628,481 on share price of $589.58, which is already outdated and too low! The current share price is $628 (April 11th 2012). It is like printing money for the Apple employees. They are making tens of thousands of US dollars every week - on paper...that is the key. When do you convert that to cash? And what are the rules on selling shares as an employee, at Apple. There will be rules, otherwise employees could depress the share value on a mass sell off.

An Apple document in relation to the Employee Stock Purchase Plan states:

The Company has a shareholder approved employee stock purchase plan (the “Purchase Plan”), under which substantially all employees may purchase common stock through payroll deductions at a price equal to 85% of the lower of the fair market values as of the beginning and end of six-month offering periods. Stock purchases under the Purchase Plan are limited to 10% of an employee’s compensation, up to a maximum of $25,000 in any calendar year. The number of shares authorized to be purchased in any calendar year is limited to a total of 3 million shares. As of September 26, 2009, approximately 4.7 million shares were reserved for future issuance under the Purchase Plan. 

As an employee, even if you invested about £10k per year (relative small sum) the way the Apple share price is soaring you will still be a millionaire soon. The "experts" predict that the Apple share value will continue to climb creating a market valuation for Apple of one trillion USD. It is already the most valuable company in the world. That value would double the number 2 company Exxon.

It has to end. Oh, by the way Apple don't pay proper corporate taxes in Britain and this is causing consternation. They paid about $10m on about $6 bn of revenue as far as I remember. They avoid tax through clever tax dodges and there are question marks over their manufacturing ethics.

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