Apple CEO Tim Cook asks for a big cut in compensation
Mario Tama
Say-on-Pay votes rarely get internalized by company executives and the board, but something new is brewing at Apple (NASDAQ:AAPL). The compensation committee and CEO Tim Cook have decided to reduce his annual compensation by 40% for 2023 in response to shareholder criticism. While his $3M base salary and $6M bonus will remain the same, the total amount of equity awards available will decrease from $75M to $40M, putting his total payout target at $49M.
Other changes: The percentage of Cook's stock units linked to Apple's (AAPL) performance will make up 75% of his overall equity award, up from 50% in 2022. That will more closely align his incentives with future growth performance instead of time spent at the company. Apple (AAPL) also lowered the number of restricted stock units Cook would receive if he retires before 2026.
"The Compensation Committee balanced shareholder feedback, Apple's exceptional performance, and a recommendation from Mr. Cook to adjust his compensation in light of the feedback received," Apple revealed in an SEC filing. "Taking into consideration Apple’s comparative size, scope, and performance, the Compensation Committee also intends to position Mr. Cook's annual target compensation between the 80th and 90th percentiles relative to our primary peer group for future years."
Go deeper: Executive compensation was a big discussion at last year's annual meeting, when Institutional Shareholder Services recommended that Apple (AAPL) shareholders vote against Cook's pay package. There has been some increasing pressure since then, especially as Apple (AAPL) deals with supply problems in China, weakening tech demand and the possibility of breaking its 3.5-year growth streak over the holiday quarter. While shares of Apple (AAPL) are up 6% YTD, they have fallen 24% over the past year, compared to the 27% decline of the tech-heavy Nasdaq Composite Index.
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Comments (113)
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Datsyuk13
15 Jan. 2023
Yeah complain about a dude who’s actually worth more than what he gets paid already - at least relative to those other guys.
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Nnnnnot So Smart
15 Jan. 2023
As AAPL shareholders, we need to have Tim Cook around to resolve the worldwide supply chain issues. He is one of the best in the world on logistics. What is that skill worth to Apple?Hint: A lot.
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TFnewbie
14 Jan. 2023
how many who complain about this salary cut would have done the same? This does not happen often and most people would just carry on. In my view, this is an admirable action and as a shareholder I am pleased with what it signals about his concern for the company.
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@TFnewbie I wish he had gotten a raise instead.
SuperPac
14 Jan. 2023
''While his $3M base salary and $6M bonus will remain the same, the total amount of equity awards available will decrease from $75M to $40M, putting his total payout target at $49M.''
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We will soon have lumpen proles here shedding tears for TC.
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We will soon have lumpen proles here shedding tears for TC.
eeeW
13 Jan. 2023
he has reduced his fancy clothing spending habits [sarcasm, the man dresses like a robot]
john.fAIrplay
13 Jan. 2023
This will mean millions less in taxes for California to deal with its gigantic homeless/hungry problems. How many will die because Mr. Cook bowed to left-wing pressure?
berylrb
17 Jan. 2023
@john.blockchain (aka Fairplay) Wow, are you really narrowing the concerns of a great state like CA down to one issue -- homelessness!I live in CA right next to the American River, and yes there are a few homeless camps, at least there was until the flooding started. We have currently lost more lives due to flooding than we did all summer due to wildfires. We have roads that are just gone, they just melted away. We have bridges that will take years to rebuild because the foundation is shot. We have $billions in dollars of homes/businesses that are beyond mere restoration services. We finally are becoming unified around the need for storm water reclamation projects and on the cusp of ending juvenile fights over snow run-off. Finally we are looking past myopic one issue agendas and seeing that our great state is constantly fighting on multiple fronts season after season.But if helps your ego keep focusing on one-off issues.
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tbooth5
13 Jan. 2023
While I can admire some of what Cook did, I can't say I'm impressed with it. I can find no way that anyone, no matter how effective they are, is worth 1447 times more than the average worker who actually makes Apple work. Somehow that makes no sense to me. You can say that no one else can do the job as effectively, but that flies in the face of common sense as there are numerous CEOs who could do a fine job running Apple. One problem I have with the pay of CEOs is that the pay is a result of a "good old boys" network that basically scratches each others back. The boards are stacked with people who will support the pay for the CEOs no matter what, with no sense of responsible governance.Probably get a lot of disagreement with this, but it's hard for me to imagine anyone being worth that much more than the people that actually make the company run.
deercreekvols
13 Jan. 2023
@tbooth5 Tim Cook taking a 40% cut in compensation and will still take in $49 million. Outrageous! Overpaid for running the most valuable company in the world. Right? Until you see these salaries for one year of work: Russell Wilson- NFL QB: $53 million; Matthew Stafford- NFL QB: $51.1 million; Aaron Rodgers- NFL QB: $66.9 million; Stephen Curry- NBA: $48 million; LeBron James- NBA: $44.5 million...sure, sports fans can make an argument for what market value is until this salary is seen...Russell Westbrook- NBA: $47 million...If Russell Westbrook is getting that salary this year, Tim Cook is underpaid...by a lot.
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@tbooth5 I agree with Deercreek. Tim Cook is underpaid and deserves a raise.
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MiamiInvest305
13 Jan. 2023
@Demurgetroid They actually demonstrate an extremely unique level of skill. CEO's hardly ever do. And if they do, it's not multiples like 1000x of the other smartest employees at their firm unlike that truly very rare athletic ability possessed by the greats.
Danoxx
14 Jan. 2023
@MiamiInvest305 Tim’s retirement bonus will be massive, he won’t lose a penny.
S
@Danoxx that’s good to know. He certainly deserves a lot more!
InvestingForFuture
13 Jan. 2023
Well, now that his cumulative compensation has set him up for life 100x over, he can afford to virtue signal that he wants a reduction in compensation. I'm not saying he didn't deserve what he was paid because he has done a fantastic job leading Apple to where they are today.
smadadet
13 Jan. 2023
He should get a 100% cut by being fired for the failed "everything made in Asia and nothing in North America" sourcing strategy that has put the entire company at risk.
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MiamiInvest305
13 Jan. 2023
@ContyC Its terrible for Americans though. And you should take excellent care of your own nation and its peoples as part of an ethical corporate doctrine.
bart_sst
13 Jan. 2023
@smadadet : "for the failed 'everything made in Asia and nothing in North America' sourcing strategy"There is not now nor has there ever been such a strategy, smadadet. Disabuse yourself:loupfunds.com/...…and:www.apple.com/...
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GTMoore56
13 Jan. 2023
Tim Cook is taking quite a hit - going from $1.5 Million per week to only $1.0 Million per week. Gotta feel bad for the guy......
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Non-GAAP Earnings
13 Jan. 2023
@GTMoore56 Tim Cook has signed on with the Giving Pledge, so this reduces the legacy that he will be able to leave. So yes, you are correct that it is quite a hit.
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ctclark99
13 Jan. 2023
Cook has done a great job of monetizing apple and its customers, but that only goes so far before real damage is done. I Google searched cloud vendors, apple not even in the top 11 of results. On my 3rd apple computer, $3000 MBP. It stinks!!!!!!!!!!!!!!!!!!! and each update makes it worse! There is no quality control any more now that Steve Jobs is gone. True innovation is gone and replaced by cheap social media fluff. Next computer I'll make the painful transition back to PC's for good and good riddance cook and apple!
deercreekvols
13 Jan. 2023
@ctclark99 Steve Jobs passed away in 2011.Are you suggesting that for the last 12 years Apple has not had quality control?
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MiamiInvest305
13 Jan. 2023
@ctclark99 Yup. My M1 MBA has been the worst apple product I've owned, aside from the prior 2018 MBP which needed the keyboard replaced from that other fiasco. My old MacBooks worked for ages like champs with no issues. QC has def gone WAY down.
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MiamiInvest305
13 Jan. 2023
@deercreekvols They def do, he's suggesting that QC has gone down markedly in last 12yrs considering the crazy high bar Apple had set under Jobs. And indeed it has.
DavyJ
13 Jan. 2023
That $49 million divided by 1.6 billion shares equates to 3 cents per share. That's Cooks take. Shareholders receive dividends of 92 cents per share per year.Or compare that 3 cents to the gain in share price he has given to shareholders over his tenure. Even if you only started with one share which, due to splits, you would have 28 shares.If you're an employee and were not investing in the company, you were doing it wrong.I'd say Cook definitely earns his money.
@DavyJ 16 billion shares outstanding, not 1.6. So 0.3 cents per share, not 3 cents.
DavyJ
13 Jan. 2023
@VoiceofSanitySometimes Thanks for the correction.Now I'm thinking Tim needs a raise. How about a penny a share? :)
@DavyJ I think Cook has done a fine job negotiating his pay and bonuses, but if you want to offer to be his agent... :)More generically, you and I agree that CEOs of highly successful companies deserve what they get paid, and Cook is certainly that. It's when the CEOs of poorly run companies ask for big bucks that I get annoyed, and even more so if the Board gives it to them...
Doctor_ECE_Prof
13 Jan. 2023
What is new here (the total amount of equity awards available will decrease from $75M to $40M, putting his total payout target at $49M.)? They are quoting a dollar figure and not the number of stocks.
AAPL stock got a 30% haircut and so is he, technically; but he will get the same number of stocks!
Sounds like the middle eastern camel story of loading the camel with too much and removing some to please the camel. Here they are making the AAPL fanboys by deceptive words :)
AAPL stock got a 30% haircut and so is he, technically; but he will get the same number of stocks!
Sounds like the middle eastern camel story of loading the camel with too much and removing some to please the camel. Here they are making the AAPL fanboys by deceptive words :)
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King_Crab77
13 Jan. 2023
I saw Tim at Walmart the other day.
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Croogie
13 Jan. 2023
@King_Crab77 Aldi is way more cheaper.
Harmon E
13 Jan. 2023
@King_Crab77 this is why I read the comments
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Good PR move, both by Cook and the Apple Board. It shows they aren't tone deaf to investors.When this dip in AAPL shares is over, the Board can award Cook whatever he missed out on and no one will complain.