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Apple (AAPL) amends Tim Cook's stock compensation package to tie it to the performance of Apple...

Apple (AAPL) amends Tim Cook's stock compensation package to tie it to the performance of Apple shares. Previously, Cook was guaranteed (provided he remained CEO) 500K restricted stock units in Aug. 2016, and another 500K in Aug. 2021. Now, only 100K units vest in those periods, and an 80K-unit annual award is given until 2021 provided the performance of Apple shares beats at least 2/3 of S&P 500 companies in a given year. The award gets cut by 25% if performance is in the middle third, and by 50% if in the bottom third. Apple says it wants to tie a portion of exec. compensation to performance, and that Cook "is leading this initiative by example." (8-K)
Comments (48)
  • This is an EXCELLENT development. Hopefully more large companies will follow this example.
    21 Jun 2013, 07:22 PM Reply Like
  • Fixing his option doesn't change the fundamental problem which is that he is over his head. This is a cosmetic change that wont bring value to the shareholders. This is an scapegoat for the board lack of action.
    You are taking about the greatest corporate failure of the century. Hope time magazine put him on the front page with a chart of the stock and the collapse.
    He owe to the shareholder his resignation / Shareholders should have the opportunity to recover some of their massive losses. The company need a new leader. He is part of the past. Jobs biggest achievement ws the IPhone . His major failure TIM Cook.
    21 Jun 2013, 08:12 PM Reply Like
  • The most profitable quarter AAPL ever had was also under Tim Cook. This idea was also reportedly Cook's, he's putting where his mouth is, let's see what he does this fall. I have a feeling shareholders will be singing a different tune when the new lineup is introduced.
    21 Jun 2013, 10:20 PM Reply Like
  • New move?
    May be, but APPL problem is with new innovative products,
    I wrote about it about 2 years ago: http://bit.ly/15bxL42
    22 Jun 2013, 07:47 AM Reply Like
  • Apple 1 Could Fetch $500,000 or More at Auction.
    Vintage Apple products have become an especially hot item since Jobs' death in October 2011, surrounding the mystique attached to this entrepreneur who joined forces with Wozniak to build computer prototypes in a California garage.
    Another Apple 1 was sold last month for a record $671,400 by a German auction house, breaking a previous record of $640,000 set in November. Sotheby's sold one last year for $374,500.
    May be it will help Tim Cook's shares to shine?
    22 Jun 2013, 07:58 AM Reply Like
  • Buffett even said himself that berkshire has lost 40% of its value 3 times in the past. Does that make him a failure?
    22 Jun 2013, 01:51 PM Reply Like
  • Those in the best position to know don't agree with your constantly attacking negative assessment. Cook is down from his 97% approval last year, but still very highly ranked when you consider all the doom and gloom coming from ill informed outsiders trying to damage AAPL. Jobs was earlier at 95%.

     

    http://bit.ly/16YZW6m
    22 Jun 2013, 03:45 PM Reply Like
  • You write about it, but it wasn't true then and it's not true now. Do you really expect truly innovative products every year? In the past decade plus, we've seen the iPod and its progeny, and the iPhone and its. All the AAPL haters are always claiming AAPL never innovated anyway--that other companies came up with all those ideas first. If that's true, then what AAPL did was to be the first to make that technology usable and desirable. That was true then, and it's true now with the next wave of technology. Betting against AAPL would be foolish.
    22 Jun 2013, 03:46 PM Reply Like
  • I don't think it is a corporate failure. The corporation already succeeded massively. It will simply be a missed opportunity that another corporation might take advantage of. These people already changed the world. Now the world is asking them to do it again. We will see if they will.
    22 Jun 2013, 06:11 PM Reply Like
  • second
    21 Jun 2013, 07:28 PM Reply Like
  • Looks like he'll be taking a pay cut
    21 Jun 2013, 07:33 PM Reply Like
  • It will be an enormous pay cut too. This is the most innovation inside AAPL since the 80's. Good for them, terrible for the CEO.
    22 Jun 2013, 10:10 AM Reply Like
  • Long overdue. Too many of these guys go on autopilot mode. As coach Popovich told his team last year in the playoffs, Tim Cook needs to show us some nasty against Samsung.
    21 Jun 2013, 07:33 PM Reply Like
  • I have no issue with this. Correct move. CEO's salary should be tied to corp. performance.
    21 Jun 2013, 07:36 PM Reply Like
  • Why did it take so long for the Board of Directors to wake up!!!
    21 Jun 2013, 07:44 PM Reply Like
  • What's not mentioned is that the Board didn't 'wake up' - Tim Cook himself brought the recommendation to the Board.
    21 Jun 2013, 08:08 PM Reply Like
  • Wow! That's leadership, especially when things are tough.
    21 Jun 2013, 09:53 PM Reply Like
  • "Tim Cook himself brought the recommendation to the Board. "

     

    Sounds like he is calling the bottom, then.
    22 Jun 2013, 05:21 AM Reply Like
  • Yes. And there's more. Incentivized compensation generally has an upside component as well. Cook did not accept the upside, but that won't be true for incentivized compensation for others. With AAPL so undervalued, the bar is low and RSUs become even more appealing to attracting talent.
    22 Jun 2013, 03:49 PM Reply Like
  • I'm with you, btbriant. Cook is the ultimate insider and he knows what releases and announcements are coming up. He has availed himself of a chance to realize more of the upside while still looking like a good guy.

     

    Hasn't he already said in the usual plain words that there is a lot coming later this year and through 2014. Apple doesn't pump, tout, or lie. He also tried to tell us not to expect releases in the first half.

     

    Use information, not speculation.

     

    The next couple days will be telling. We are going to see one of three things: a higher low (having broken support around 417), a retest of previous low at 385, or a break lower. My money in a long position with a hedging put options spread is on the retest, or at least another nod lower before any recovery.

     

    A crash of AAPL is remote, at best, IMO.
    23 Jun 2013, 02:51 PM Reply Like
  • Tying executive compensation to stock price is exactly the type of policy that led to the corruption and cooked books scandals from the late 1990's to 2002 - Enron, Tyco, World Com and all the other crooks - prop up the stock price as long as you're at the helm, no matter how much you lie, cheat and steal. Yeah, this is real progress.
    21 Jun 2013, 08:00 PM Reply Like
  • The only difference is there is now Sarbanes-Oxley.
    21 Jun 2013, 08:09 PM Reply Like
  • Sarbanes Oxley. Ha, Ha, Ha, Ha........

     

    What a stupid move, tying compensation to the exogenous world of the share price. Now he can focus on inflating the share price thourgh a variety of means which are not reflective of how the underlying fundamentals of the business are performing.

     

    Tie it to specific returns: sales, margins, net income, return on equity....but share price? In a pinch, he just goes to Carl Icahn and sells what's left for the takout price....bingo, share price is up; pay me!

     

    Didn't we learn anything last time around? The next thing you know the excercise price wil be lowered, and lowered, and lowered....where have we seen THAT before?
    21 Jun 2013, 08:37 PM Reply Like
  • Double edge sword.
    21 Jun 2013, 08:07 PM Reply Like
  • Great news.
    21 Jun 2013, 08:10 PM Reply Like
  • It's about time.....Ya Think
    21 Jun 2013, 08:36 PM Reply Like
  • Stock prices can be manipulated while the underlying fundamentals of the business are ignored. Now Tim Cook will look at a stock ticker all day instead of being concerned with excellent product. This is what happens when bankers run companies. Mr. Cook can go into this with the best of intentions, but you know what they say about the road to hell.
    21 Jun 2013, 08:46 PM Reply Like
  • Sounds a bit fishy. Perhaps there are other elements to the new package which we don't know about yet ? Perhaps a higher guaranteed golden parachute in case he is ejected ? Perhaps a new annual cash bonus ? Doesn't make sense for Cook to voluntarily give up so much without something in return. I wish Cook and Apple the best, but sure wish they increase the pace of introducing new products, ie TV, iphone, game box, suspect they are going after the new XBOX demographic but maybe build in into the TV itself ? just guessing.
    21 Jun 2013, 09:09 PM Reply Like
  • To all the Apple haters: "Did you miss the boat when the stock enriched so many share holders who new what a great company it was? AND STILL IS!"
    21 Jun 2013, 09:23 PM Reply Like
  • This is an encouraging move. Should draw in more investors, who see that he is putting his own money at risk because he is confident the stock will do well.
    21 Jun 2013, 09:49 PM Reply Like
  • TC seems to have more ethics than most ceos......Health is more important than money . anyway...I am sure TC's pay cut wont restrict his present lifestyle....btw a million dollars will not buy an extra moment of time on this big rock. Btw Tim Cook is a fitness fanatic....
    21 Jun 2013, 10:22 PM Reply Like
  • Of course the AAPL haters on here are now complaining that Cook will spend too much time focusing on the share price. Well, I've been listening to you guys talk smack for the last 6 months that the company doesn't care about shareholders. So which is it?
    21 Jun 2013, 10:26 PM Reply Like
  • I would hate to EVER try to satisfy this audience. Read the contradictions among these comments!
    21 Jun 2013, 11:50 PM Reply Like
  • what if market goes bear

     

    it wont e difficult to beat lol

     

    which is entirely possible since fed is wringing out profits for insiders
    22 Jun 2013, 12:05 AM Reply Like
  • Instead of money, pay in Shares why not.
    22 Jun 2013, 06:14 AM Reply Like
  • In reality this will not make much difference now. It is better to restrict the time to sell the stock. For example after vesting they can only sell 20% a year.
    Remember if Apple stock price drops more iCook will be iCooked anyway. That is why I said this change will not really affect his compensation.
    22 Jun 2013, 07:39 AM Reply Like
  • For the last year I have read nothing on SA but attacks on Tim Cook, and criticism of his leadership... Specifically SA readers have railed against him as a CEO who doesn't care about shareholders.

     

    Well, TC has raised the dividend, instituted the biggest share buyback in history, and now he has cut his potential options by hundreds of millions of dollars... Yet STILL SA readers attack him. It's annoyingly nonsensiscal, and these comments show just how unsophisticated and near-sighted SA readers/commenters really are.
    22 Jun 2013, 09:15 AM Reply Like
  • I crunched the number for all stocks in the S&P 500 since June 22, 2012 to June 21, 2013. And guess what? Apple's return of -27% was at the bottom 2% of the list. Bottom 2%!!!

     

    At that level, I think Tim Cook should only get 5% of his RSU.
    22 Jun 2013, 10:11 AM Reply Like
  • This is not necessarily good news. It depends on the details and how much and to what extent compensation is/will be tied to stock price performance. This could potentially lead to cascading changes to Apple's corporate culture (which used to be a strength) starting from the top. Too early to tell...
    22 Jun 2013, 02:01 PM Reply Like
  • I'll use the hot restaurant/bar analogy, which applies to many tech firms and segments of industry. When the "cool factor" fades, revenues growth peaks, then management focus turns to cost cutting and micro management, employee morale starts to decline and "teamwork" atmosphere turns more towards "cut throat" competition. What may seem like prudent business decisions actually backfires and accelerates the decline (which happens all the time in restaurant/bar sector).

     

    Apple needs to focus on innovation, period.
    22 Jun 2013, 02:39 PM Reply Like
  • This is a terrible move. Tying compensation to stock price performance? Wow.
    22 Jun 2013, 02:22 PM Reply Like
  • Hey bottom third still gets him half the bonus! How about nothing if not in the top 2/3?
    22 Jun 2013, 03:19 PM Reply Like
  • When will they start the buyback?
    22 Jun 2013, 03:21 PM Reply Like
  • The biggest corporate failure was when TIME / Warner acquired AOL. The TW shareholders were destroyed. AOL was a bust.
    23 Jun 2013, 02:55 PM Reply Like
  • Excellent move for Mr Cook. If you are long AAPL, patience is necessary. If not long or not at least thinking of being long, seems to me to be a waste of time complaining (or it would be in my case).
    23 Jun 2013, 03:25 PM Reply Like
  • Because what Apple needs is more short term analyst and market thinking. Pity :\
    24 Jun 2013, 01:33 AM Reply Like
  • have ground breaking products for aapl who do i call......bobby
    28 Jun 2013, 03:35 AM Reply Like
  • i an a semi retired ontepenewr looking for a part time job to give ground breaking ides to big company's i have stock in bobby
    28 Jun 2013, 03:38 AM Reply Like
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