Apple just cut Tim Cook's pay by 40%. How ever will he get by on that $50m?
Something something shareholders unhappy with the heft of CEO's package
Apple CEO Tim Cook's 2023 compensation package has been slashed by 40 percent, Apple said, after the iBoss okayed the move in response to shareholder criticism of executive pay.
Apple said in its annual proxy statement filed with the SEC yesterday that Cook's total target compensation was being reduced to $49 million from the $84 million the company planned to pay him last year.
Cook's base salary of $3 million, and his annual cash incentive of $6 million, remain unchanged. Instead, Apple said shareholders wanted Cook's pay to be based more on the company's performance, which it said his new compensation schedule accounts for.
In 2022, Apple targeted $75 million in equity awards to supplement Cook's cash payments, which were split 50/50 between performance-based and time-based vesting. This year, Cook's equity awards will top out at $40 million, with 75 percent being performance based and only a quarter vesting based on time.
Say on pay? We say no
Apple said in its proxy statement that its annual "Say on Pay" vote, which lets Apple shareholders vote on executive compensation, received just 64 percent approval at the 2022 annual meeting – the first clue that something was wrong.
"This result was a notable year-over-year decline, as our annual Say on Pay proposals have received much higher levels of shareholder support for many years," Apple said.
Apple said shareholders it spoke to were happy with Cook's leadership, but "consistently cited the size and structure of the 2023 and 2022 equity awards granted to Mr Cook" as their reason for voting no.
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In a bit of self-congratulatory problem acknowledgement, Apple said its shareholders broadly acknowledge Apple faces a challenge in "identifying relevant comparable peers for compensation benchmarking purposes given Apple's exceptional performance and significantly larger size relative to other companies."
Apple said that Cook's future compensation will be based on other exec pay in that hard-to-define peer group, with a target "between the 80th and 90th percentile" relative to its peers.
Forbes profile of Tim Cook shows him to be worth approximately $1.7 billion, with much of that thanks to stock compensation from Apple. Cook also took home more than Apple had planned to give him last year, with his actual pay reaching $99.4 million. In 2021 he reportedly earned $98.8 million, a 500 percent increase from his earnings the prior year, The Financial Times said.
Apple also said in its proxy statement that it set sales records around the world in 2022, with net sales up 8 percent and operating income up 10 percent year-over-year. In other words, Cook probably isn't too worried about losing performance-based pay.
Apple will share more yearly numbers at its annual shareholder meeting on March 10. ®