Coverage: Apple CEO Cook gets a big pay raise
A year after delivering an unusual pay cut, Apple Inc. gave chief executive Tim Cook and other top executives a big boost in compensation for fiscal-year 2017 as the company exceeded annual sales and profit goals.
Zoey Chong of CNET had the story:
Tim Cook received a total of $12.8 million, an increase of 46 percent from when earnings fell, according to a regulatory filing on Wednesday. Adding $89.2 million in equity award, Cook brought home a whopping $102 million in 2017, minus compensations.
The news comes as Apple brought home almost 60 percent of profits generated in the global smartphone segment in the last quarter, according to Counterpoint Research, although sales were mainly boosted by an increased popularity of its older iPhone models. With that said, Apple does make $151 more than Samsung, the next top performer, for every unit sold. It could have made even more this quarter given it coincides with the launch of Apple’s anniversary phone, coupled with increased sales this holiday season — analysts said six million iPhone Xs were sold over Black Friday.
While better sales is good news for Apple, which saw sales decline for the first time last year, the company thought it also means Cook’s security could be at risk. So the iPhone maker now wants Cook to fly private for “all business and personal travel,” it said in the filing. Cook isn’t the first Apple CEO to use a private jet for air travel. The late Steve Jobs was gifted a Gulfstream V airplane by the Cupertino-based company which he co-founded “in recognition of his service to the company” more than a decade ago.
Matt Weinberger of Business Insider focused on the private jet requirement:
Apple’s board of directors is now making CEO Tim Cook fly on private aircraft when he travels, whether for work or for pleasure.
“This policy was implemented in 2017 in the interests of security and efficiency based on our global profile and the highly visible nature of Mr. Cook’s role as CEO,” Apple said in a shareholder proxy statement released Wednesday afternoon.
The proxy statement goes on to say that any time Cook uses an Apple private jet for personal travel, the costs are considered extra compensation, on which he will have to pay taxes.
To that end, Apple says Cook racked up $93,109 in personal travel costs for the company this year “based on hourly flight charges and other variable costs incurred by Apple for such use, including variable fuel charges, departure fees, and landing fees.”
Similarly, Apple paid $224,216 in “incremental” private-security costs for Cook, the statement says, including hiring personnel specifically for his benefit. All told, Cook made $12,825,066 at Apple in 2017 — including a $16,200 contribution to his 401(k) retirement account from the company.
Anders Melin and Alex Webb of Bloomberg News reported that Cook’s top lieutenants also got nice bonuses:
His top five lieutenants each got bonuses of $3.11 million, bringing their total compensation to about $24.2 million each, including salaries and stock awards. The equity compensation is composed of shares that vest solely based on the executives’ continued employment and others tied to the performance of Apple’s stock compared with other S&P 500 companies.
Apple has increased the proportion of performance shares in its equity awards, which boosts potential future earnings for the executives if the company outperforms its S&P 500 peers. History suggests that could be a good deal for them.
In 2014, executives including Dan Riccio, chief of hardware engineering, and former General Counsel Bruce Sewell received performance awards that paid out three years later at almost twice as many target shares as planned after Apple’s stock returned 69 percent over that span, including reinvested dividends. In August, Cook collected 560,000 shares when part of his 2011 mega-award vested because Apple outshined more than two-thirds of the S&P 500 over three years.