Apple CEO’s Pledge to Give Away His Fortune is Worth More Than Face Value

Love or hate Apple, Inc. (AAPL) or the fact that it’s the world’s most powerful company controlled by an openly gay CEO (sorry, Indiana), most should be able to appreciate the commendable gesture that Apple’s CEO Timothy Donald “Tim” Cook is making.  After much soul-searching Tim Cook revealed in a new Fortune interview that he has resolved to join the likes of Microsoft Corp.’s (MSFT) cofounder and former CEO Bill Gates and Facebook Inc.’s (FB) Mark Zuckerberg in pledging to give away the vast majority of his fortune to charitable causes by the time he dies.

I. Rise to the Top

When Apple cofounder Steven Paul “Steve” Jobs returned to Apple in late 1997 with the completion of the acquisition of Jobs’ NeXT Computer, one of his first orders of business was rebuilding Apple’s executive ranks with a series of brilliant up-and-comers who would be loyal to his vision.  Among them was Cook.

Cook had spent more than a decade climbing to the rank of vice president at several top electronics firms, including International Business Machines Corp. (IBM) (1982-1992), Intelligent Systems (1993-1997), and Compaq Computer Corp. (1998).

When Steve Jobs approached Cook about joining Apple, trusted friends advised him to stay at Compaq.  He didn’t take their advice.
Cook joined Apple in 1998.  As he recalled in a commencement speech at his alma mater, Auburn University, the choice was a very emotional one based on Jobs’ magnetism:
Any purely rational consideration of cost and benefits lined up in Compaq’s favor, and the people who knew me best advised me to stay at Compaq… On that day in early 1998 I listened to my intuition, not the left side of my brain or for that matter even the people who knew me best… no more than five minutes into my initial interview with Steve, I wanted to throw caution and logic to the wind and join Apple.
At Apple Cook flourished.  Above all else he was a master of managing countless small details that go into making high quality computers and mobile devices at the lowest possible cost.  Thanks to him Apple earned its reputation of being on the high end of the hardware market, while being known to suppliers as one of the most ruthless negotiaters.

For years Jobs’ successor was unclear, but Tim Cook rose to the occasion and has flourished in his new job. [Image Source: Fast Company]
In Jan. 2009 Steve Jobs took a leave of absence from Apple, and to the suprise of many, the quietly brilliant Cook was tapped as his replacement.  Things went reasonably well, but Apple fans and investors seemed relieved when Jobs returned in June 2009.

Jobs would take leave once more in Jan. 2011 as his health declined and Cook would once more step into the interim CEO role.  In Aug. 2011 Steve Jobs resigned one last time.  And this time there would be no comeback — Jobs passed away on Oct. 5, 2011, just six weeks after resigning from the company he devoted much of his life’s work to.

Apple’s Board of Directors chose the somewhat more known quantity of Cook over the flashier up-and-comer, iOS software SVP Scott Forstall.  Forstall was reportedly not happy with this development and there was internal friction among Apple’s upper ranks.  After the botched release of iOS 6, though, Cook at last had the leverage he needed to cut the ambitious, rancorous SVP from the team.  In Oct. 2012 Cook dismissed Forstall.


Tim Cook has kept Apple on pace. [Image Source: Bloomberg]
Since 2012 Apple has been on a roll, recording record products, and diversifying its lineup somewhat with new models, such as the colorful midrange iPhone 5C, the phablet flagship iPhone 6+, the 7.9-inch iPad Mini, and (most recently) the Apple Watch.  

Tim Cook and Steve Jobs think different, according to Fortune. [Image Source: Fortune]
Today Apple is the world’s most valuable company in terms of market cap, and was recently promoted into the elite Dow Jones Industrial Index — a composite based on the 30 most valuable and stable publicly traded companies in America.

II. Cook is Cool and Confident as the Man in Charge

After 3 and 1/2 years on top, Cook’s leadership is no longer in question.  He is CEO of Apple for the forseeable future.  And Cook’s confidence has grown.  Among the ambitious changes he’s looked to make at Apple is making its product development, corporate policies, and other aspects more public and participatory.  He comments:
My objective is to raise the public profile of several of the folks on the executive team, and others as well. Because I think that’s good for Apple at the end of the day.
Apple’s new more public persona seems to be working.  And being the king of America’s richest corporate fiefdom comes with major perks.  It has made Cook — the son of a shipyard worker and pharmacy clerk — a wealthy man.

[Image Source: iRumorsNow]
In the interview Fortune notes that Cook is currently owns around $120M USD in unrestricted Apple stock — roughly 975,000 shares.  He has an additional 5.4 billion shares under lockdown as restricted stock.  At its current value that would be worth roughly $665M USD if he fully vested it.  As most of his net worth is in Apple Stock, Cook is estimated to be wroth around $785M USD at present.

How business leaders react to obtaining massive fortunes varies wildly.  Cook’s predecessor’s Jobs publcly sneered at corporate charity or activism on issues.  He was notoriously tight-fisted with shareholder payouts.  And he seldom publicized giving in his personal life either — despite reports that he and his wife have given away a relatively large sum of money anonymously via shell companies.

Steve Jobs’ widow, whose fortune is worth roughly 25 times Cook’s has refused to back the Giving Pledge, prefering to keep her charitable efforts smaller and private. [Image Source: Getty Images]
When he passed away he left behind a fortune estimated to be worth $6.7B USD, including 138 million shares of stock in the Disney Comp. (DIS) (a 7.4 percent stake of total shares) worth $4.4B USD at the time and 5.5 million shares of Apple stock worth $2.1B USD.

His widow — the now 49-year-old Laurene Powell Jobs — has held on to most of those shares.  Today, accounting for the 7:1 stock split in 2014, Apple is up 133 percent — a rise that’s heavily thanks to Tim Cook, it should be noted.  Disney is up more than 230 percent over the same period.  All things considered, Jobs’ estate has nearly tripled, reaching $18.5B USD last month according to Bloomberg.  (It’s since risen even more to $19.5B USD, according to Forbes).

And while she’s stepped up her organization’s giving of charitable grants, she’s declined to sign the Giving Pledge — the pledge endorsed by Gates and others that requires members to give away at least half of their fortune by the time they die.

Bill Gates’ Giving Pledge has become the most iconic vow of charity in the corporate world.
[Image Source: CBS]
In other words, when it comes charity, it would be very wrong to say Steve Jobs and his wife gave nothing, but there’s little sign that they plan to give away even half of the immense fortune Steve accrued.

Cook is a different story altogether.  Unlike his mentor and predecessor believes strongly in public giving and activism.  During his brief time as CEO he’s ramped up the distribution of Apple’s massive cash stockpile to shareholders in the form of share buybacks and dividends.  In total he’s paid out an incredible $92.6B USD to shareholders during his time as CEO — or roughly $26.5B USD per year, on average.

Under Cook shareholder payouts have sharply risen. [Image Source: Fortune]
He’s also encouraging Apple employees to give money publicly to charity and is looking to make Apple a leader in eliminating workplace and retail discrimination against minority groups.  To that end Cook’s decision to publicly confirm his sexuality was a carefully controlled move to strike a blog agaisnt discrimination and bigotry, he says.  

Fortune writes:
Speaking out so publicly was a big step for Cook, though, who has described himself as intensely private and who is rare among big-company CEOs for being genuinely ill at ease talking about himself. “To be honest, if I would not have come to the conclusion that it would likely help other people, I would have never done it,” he says. “There’s no joy in me putting my life in view.” Referencing the often-cited line that “to whom much is given, much is required,” Cook says, “I’ve certainly been given a lot.”
At Apple Cook has launched a program called “Inclusion Inspires Innovation” to ensure that Apple is on the cutting edge of eliminating workplace discrimination and harassment.

In addition to gay rights, he’s also become vocal about protecting data privacy, joining rivals Google Inc. (GOOG) and Microsoft in publicly challenging America’s Orwellian programs of domestic spying.  He has flatly refused to budge on the issue of affording iOS users the ability to encrypt data on their mobile devices, something the Federal Bureau of Investigation’s (FBI) Director James Comey claims forments crime.

III. The Pebble That Rippled the Pond

And aside from acitivism and shareholder payouts, he dropped a major tidbit in the Fortune interview, revealing he would give away virtually all his wealth over his lifetime.  The report states:
Representing their companies publicly is obligatory for CEOs, but Cook takes public stands on issues including stopping the transmission of AIDS, human rights, and immigration reform. He sees them as opportunities for leadership.

“You want to be the pebble in the pond that creates the ripple for change,” he says, adding that Apple’s people have long cared about such issues even if they haven’t previously spoken so openly about them.

To Cook, changing the world always has been higher on Apple’s agenda than making money. He plans to give away all his wealth, after providing for the college education of his 10-year-old nephew. There should be plenty left over to fund philanthropic projects.
 
[Image Source: Engadget]
Ultimately Cook’s comments are very on the mark — or on the money, you could say.  While more than three quarters of a billion dollars might seem like an impressive fortune to the average American, Cook isn’t overly “rich” by the standards of Silicon Valleys upper echelon wealth-wise.

You can’t take it with you — Tim Cook is content to do what he loves and leave his fortune to charity.
[Image Source: Bloomberg]
Gates, 59, for example, has — despite his best efforts — been largely unable to give away money fast enough to keep up with the growth in his investments. As of March 2015 his fortune had risen to $78.1B USD, according to Forbes.  That’s roughly 100 times Cook’s claim.  And Jobs’ family trust is now worth nearly 25 times a much as Cook’s fortune.  Zuckerberg’s fortune is worth $36.7B USD as of March 2015 (that’s more than 45 times Cook’s fortune, if you’re keeping count).

Bill Gates has a far greater fortune, but can surely appreciate the powerful message Tim Cook is sending.
[Image Source: Bill Gates/Flickr]
Among the others who hold an order of magnitude wealth more than Cook include:

  • Media tycoon John Malone ($8.2B USD)
  • Google cofounder and former CEO Eric Schmidt ($9.2B USD)
  • Tesla Motors Inc. (TSLA), Paypal, and SpaceX founder Elon Musk ($11.4B USD); Microsoft cofounder Paul Allen ($17.4B USD) (who also is a Giving Pledge backer)
  • Dell’s titular founder Michael Dell ($18.5B USD)
  • DISH Network Corp. (DISH) founder Charles Ergen ($18.4B USD)
  • Ex-Microsoft CEO and early employee Steve Ballmer ($20.5B USD)
  • Google cofounder Sergey Brin ($29.4B USD)
  • Google CEO and cofounder Lawrence “Larry” Page ($29.9B USD)
  • Amazon.com, Inc. (AMZN) founder Jeff Bezos ($34B USD)
  • Oracle Corp.’s (ORCL) founder, CTO, chairman, and former CEO Larry Ellison ($52.6B USD) (who, like Steve Jobs, is notably not a giving pledge backer)

And that’s just the short list of those with 10x more than Cook — if you add those who are narrowly worth more than him, the list grows too long to reasonably list here.  Even Snapchat’s 20-something founders are rumored to be worth more than a billion on paper — more than Cook — based on bids for their hot messaging service.

Cook is not among tech’s richest. [Image Source: IBN/Forbes]
Thus while Cook’s fortune is more than the average person might dream of, it’s a drop in the bucket compared to wealthier philanthropists who have committed to massive giving.  Cold numbers would suggest that it would take fifty Tim Cooks to make the difference of one Mark Zuckerberg; one hundred to make the difference of Gates.

But Cook’s contribution is worth more than its face value because of his position.  As CEO of America’s wealthiest company, Cook’s actions are closely scrutinized, much as Gates was in Microsoft’s market cap heyday of the late 1990s.

Apple’s Tim Cook waves at the Apple Watch launch event. [Image Source: The Verge]   Much as his decision to acknowledge his sexuality is forcing Americans to reevaluate how their personal bigotry, Cook’s pledge to give away nearlly all that he has worked so hard for sends a powerful message that wealth is not meant to be hoarded and passed down from generation to generation — as his predecessor has oft been accused of doing.

[Image Source: Omnipitron]
For every dollar Cook gives, doubtless he will inspire dozens more from the current and future waves of wealthy technologists.  He is indeed poised to become the metaphorical pebble which triggers a much larger ripple in the pond.

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