“Apple Inc. Chief Executive Tim Cook received a one-time stock award worth nearly $400 million, the largest given by a company in a decade,” Alexei Oreskovic reports for Reuters.
“The company’s board granted Cook 1 million restricted stock units (RSUs) to signal its confidence in Cook after Steve Jobs turned over the helm of the iPhone and iPad maker to his long-time lieutenant in August,” Oreskovic reports. “The stock award, half of which vests in 2016 and the remaining half in 2021, was worth more than $376 million, based on the closing price of Apple’s shares on August 24, 2011, the company said in a Monday proxy filing.”
Oreskovic reports, “The only one-time stock award in recent memory that was worth more, said Boyd, was the January 2000 stock option package that Apple gave co-founder Steve Jobs. The 40 million options in that award were valued at more than $600 million at the time, said Aaron Boyd, head of research at Equilar, an executive compensation data firm.”
“Jobs, who died in October after a years-long battle with cancer, owned 5.5 million shares of Apple, according to the filing,” Oreskovic reports. “Jobs received $1 a year in salary during the past three years, according to the filing, while Cook received a salary of about $900,000 in 2011.”
Read more in the full article here.
MacDailyNews Take: Did you know that after his return to Apple, Steve Jobs never sold a single share of his Apple stock?
Tim Cook’s stock award was put in place to help insure that he stays for at least 10 years. It’s also an impetus for Cook to keep delivering, so that when his stock vests, his shares are worth as much as possible. Right now, for example, on paper his award is worth over $421 million. Beyond Cook’s obvious skills, this insurance policy is worth much more than $376 million to Apple in terms of continuity and having a smooth CEO succession. Cook is worth every penny and then some.
[Thanks to MacDailyNews Reader “Fred Mertz” for the heads up.]
Totally agree with you MDN; Cook is even worth more than that especially comparing to his peers and their dismal performances
Can’t argue with results. Success deserves reward. Not to say that more money shouldn’t filter down to Apple employees, but I would say he’s earned this, as opposed to other CEO’s who get massive rewards when their companies do badly (the justification seemingly being along the lines that things could have been worse).
This is more long-term thinking on display. What other COO / Acting CEO of a $400 billion corporation makes just $900k?
The real money is tied to 5-year and 10-year performance. As it should be when you’re at the top of an organization.
Cook made $900K in 2011. But I would expect his salary to increase in 2012 given his new role at Apple.
Can’t agree here. And much as I drink the Apple kool-aid and have since my original Mac 512ke, this is one of the problems with American economics. There is no logical reason why any exec of Apple, the US government, Enron, Google, Amazon, etc should make that kind of money when the 99% are having such tough times. Sorry, guys, I love Apple, but to award any single man a 1/3 of a billion dollars (at current value) is simply wrong on every level. If you asked me what was “fair”, given what we know today…I’d probably say roughly 1/10 of that. I’d feel as though $50 million dollars (and remember, this isn’t his salary but rather a bonus) were more appropriate, and even that may be on the high side. The other $300+ million? Choose your own answer…bring jobs back home? Feed the hungry around the world? Let’s cure cancer? Taxes for US infrastructure? I’m sorry, but no single man needs $350 million dollars. Not even Tim Cook.
Bullshit. I’m in the 99% and I’m doing great. Not billion dollar great, but then again, I don’t have billion dollar problems either.
Until you join the Apple Board of Directors, I don’t think anyone’s really interested in you musings on the worth of executives.
Get your head out of your ass and back to work!
J, again, can’t agree. And by the way, can we dispense with the “head out of your ass” comments? Uh, we’re not in high school any more.
Again, it’s excessive and is, as another poster has pointed out, also a slight to the many other tremendous Apple employees who put their heart and soul into the company every single day. There is simply no reason why any exec at any company should make that kind of money when there is so much to do in the world. Secondarily, to the poster who asked about Tim’s defection to Samsung et al, my position would be that there always has to be other reasons why one exec stays with one company…ie, his belief is their mission, his belief in their having the potential to become (or, in this case, remain) a great company improving the lives of others. Surely, Tim could go work for Samsung, but then then he’d know that he chose dollars over the fact that Samsung blatantly copies Apple in many ways. I guess my bottom line is that not every exec wants to work for a company simply because that’s where he/she will be paid the highest. There must be other factors.
Anyway, I’m sticking with my thinking here. It is simply excessive and unnecessary to give anyone, outside of perhaps Steve himself after he’d proven himself over decades of amazing service, a 1/3 of a billion dollars.
I’m sticking with my thinking too. Your estimation of what is “simply excessive” or “irrelevant” is moot. Your opinions on this matter are irrelevant. You are not tasked with deciding who gets what money.
If you want to come up with a product, take the risk of starting your own company, sacrifice everything to make it work and grow it to employ 50,000 people…then YOU get to decide who gets paid what. I’m guessing you’ve not taken these steps and are therefore not in a position to dictate pay thresholds.
Mind your own business, and get your head out of you ass.
J, once again, you can’t hold yourself from the “out of your ass” comments. Oh well, some people debate the topic; others attack the debater.
My opinions on this are no more irrelevant than yours. Your position is moot, also. Your position is meaningless and has no more merit than anyone else’s. In fact, your head is so far up your own ass that it’s popping up above your shoulders again and you think everything is normal.
Now that we’ve established that, I again stand by my assertion that corporate America has gotten off of a path which has led down an unhealthy path. There is simply no reason under the sun why any man, again with the rare exception of a Steve Jobs, should be paid by any corporation, a 1/3 of a BILLION dollars. Someone queried what should happen with that money instead, and I gave a few suggestions above. However, I think the best suggestion would be to spread the money around to more of the other Apple employees.
Now, go find yourself a towel to wipe the feces off your face. It’s tough to look at you when your head is covered with your own dung.
And have a great life, buttnut!
You insist on pulling out of your ass this assertion…”There’s simply no reason…” OK, I’ll give you the reason. He runs a multinational company that is conservatively worth 400 BILLION FUCKING DOLLARS and growing. There’s your reason. He’s worth it and APPL, not random dumbass guy with a keyboard and in internet connection gets to decided how they spend it. Where do you get the ego to think anyone cares what you think about executive compensation? You need to check that.
J
Nevermark, thanks for the response. And I agree with nearly everything you’ve said, except on one count. In my thinking, there is no reason to reward any man that amount of money. In other words, while we share the same opinions on why to do it, whether Apple can afford it, whether it will help to create wealth for the shareholders, etc etc., I believe lower numbers are more warranted…not just in this case, but in corporate america.
Over the last three years, we have seen over and over again in society, general employees being laid off while management takes exorbitant amounts of money. We can see this in action in many, many industries. And, having run my own business for the last thirty years, I understand the importance of everyone sharing the dream. That $400 million dollars could do a lot of things. It could give every Apple employee an extra bonus, it could be granted to any philanthropic purpose, it could feed the needy, it could help to cure cancer, etc etc.
To give that much money to any one person is, to me, simply exorbitant. How much money can a single family need to exist happily for generations to come? To you, this may be totally justified, and I respect your opinion; I just don’t share it.
Thanks for the dialog!
@John, if reducing income disparity is your broader goal, that’s a noble one. The problem is that limiting salaries (through some sort of cap?) just doesn’t make any sense.
It would mean that companies can’t use their resources to secure the talent they may need for their operations, and it means the money would presumably stay with the company or be distributed to shareholders (or re-invested in things other than labour/manpower, like materials, equipment, assets).
The only real solution to the goal would be the income tax. Whereby companies can pay market rate for labour (like executive talent), and then “we the people” get to use some of that money for things the society deem valuable.
Hey all,
Thanks for the many replies.
Again, my position has little to do with “the going rate”. It has little to do with Tim’s performance, whether it be past, present or future.
It has simply to do with the inherent value of various jobs within society. To me, as I’ve stated repeatedly, there is absolutely and positively no reason to pay any human 1/3 of a BILLION dollars for running any corporation.
Please, those of you who put forth the idea of “the going rate”, “keeping top talent”, “Tim’s value…”, etc etc, take a step back and contemplate that. We are not talking about $10 million here. Nor are we talking about $50 million. Or $100 million. Or even $200 million. We are talking about approaching $400 million (depending on stock value at the time, of course).
I’m sorry, but I just can’t justify that from any angle. I’m not in favor of society putting a cap on it. I’m in favor of Apple taking a position of saying, “This is what we believe is far compensation for this position” and staying with that. No, this is NOT for the Board of Directors to decide…they’re all wealthy individuals to begin with and look at life through that lens. Nor even the shareholders, who are in similar positions, albeit not to the same extent, for the most part.
If you’re asking me, I would place the top number at $100 million dollars, which is more than enough for any person and his descendants to live comfortably for generations to come.
@ John, that’s such a sad thought.
In your world a business can be worth a billion dollars. A chunk of land can be worth a billion dollars. A building can be worth a billion dollars. A pile of metal or minerals can be worth a billion dollars. But a human being, the experiences, skills, talents and intuition — honed and hard-won over decades — can never be worth that.
It says “I don’t care if you can change the world, we won’t go there.”
So Apple gives him $50 million over 10 years instead of $400 million.
If you’re Samsung, Google, RIM or any number of other high tech, manufacturing, telco and/or media companies wouldn’t you offer him more than that to come play for that team? They would be stupid not to. So you’d have to legally cap salaries somehow. Prevent people from negotiating better compensation from their employers. That sounds counter to what the 99% want to see happen.
Besides, if you cap salaries you’re actually allowing corporations to hang on to more of their money.
I read the thread regarding executive compensation. I don’t fully concur with either viewpoint, although I do appreciate John’s take much more than J’s.
Few people are truly compensated according to their value. Many people are compensated less, and many are compensated more. The fact is that most workers’ compensation has little connection to actual value produced.
There is a longstanding trend that the people at the top of the corporate management heap tend to be rewarded far more richly than others, regardless of merit. A major part of the problem is the inbred nature of the system, in which CEOs are members of other boards and participate in formulating compensation policy. If you have some type of salary expectation/guarantee relative to the norm, and the norm keeps on moving up, well that just helps everyone near the top.
A fairly well paid worker might gross $3M to $5M dollars over a 40-year career (current dollars). That would put a person solidly in the middle class to upper middle class in most areas of the U.S. (depending on cost of living). So a $376M dollar retention incentive (over 10 years) on top of a salary which will likely exceed $1M per year is serious stuff. Over a 10-year period, Tim Cook’s compensation will likely equate to at least 80 to 100 careers of “regular well-paid” people. Does he deserve that based on past performance? Will he deserve that based on future performance? Should the focus not be on the “deserving” and more about the overall inequity of the compensation practices at the top of the employment chain? Another example which has bothered me for quite a while – why do many college coaches earn over $1M per year while exceptional tenured professors and researchers earn much less? Shouldn’t education be the focus of universities?
I am an Apple shareholder and I believe that Tim Cook is worth a lot. But I would not have voted for a retention bonus of 1,000,000 shares. Looking at it from another standpoint, do you want someone who is only staying for the big payout in five years and ten years? Also, a retention bonus of that magnitude will likely pay off quite well even if Apple performs poorly under his leadership and the stock tanks down to $50 per share. He would still get a $50M bonus on top of his high annual salary while my relatively meager AAPL holdings would be worth only one-eighth of their current value. In a sense, the sheer size of the bonus removes some of the financial pressure/incentive to excel.
Apple thrived because SJ poured his soul into the company starting in the late 1990s. We need leadership that combines similar vision and capabilities with that same internal motivation. Is Tim Cook worth a lot? Sure. But I can have no doubt that I could assemble a group of people who could work with other major contributors at Apple to do a comparable or better job for far less money, and be very happy doing it.
Why do many regular folks blindly accept the ongoing corporate compensation practices? Corporate managers have a fiduciary duty to the shareholders, the owners of the company. But Tim Cook is granted an ownership bonus that exceeds several thousand people like me on top of his salary. And some people blindly defend this as the “right thing”?
Before you begin inaccurately labeling me, I want to make it clear that I am not seeking income equality. Rather, I deplore the current system of unreasonable income inequality that is supported by the people in power playing with the assets that ostensibly belong to the rest of us. And where is the limit? When is it ever enough?
Kingmel, that is an utterly brilliant assessment. Absolutely accurate to my thinking; well stated, sensical and “right” from all the important angles. It is the culture of corporate America that has taken us down a path where some feel that paying any CEO a third of a billion dollars is justified. I mean, seriously.
If you took the position that a family could live comfortably on $15M over its lifetime, that would mean that the Cook family is now guaranteed for the next several hundred years. And that’s simply ridiculous.
Thanks, Kingmel, for a great post.
Thanks for the kudos, John. It is always nice when people agree with you!
This is a topic about which I feel quite strongly, and my opinion has developed over decades of observing U.S. business and employment practices. When you get people to start considering money for what it actually is – a convenient representation of the value of goods and services – opinions often change a bit. And when you take the next step of equating a certain value to a lifetime of labor, or of dozens or hundreds or thousands of lifetimes of labor – then the abstract nature of money and credit takes on even more meaning.
The ultrarich people in modern society command similar wealth as the ancient pharaohs of Eqypt who could command thousands to commit lifetimes of labor towards the construction of a tomb. Only egomaniacs desire that much wealth, and only idiots grant it to them.
Please note that I am not calling Tim Cook an egomaniac. I don’t know him and am not in a position to judge. What I am saying is that *extreme* wealth has a tendency to bring out the worst in human beings, and that an insatiable desire for wealth (or, truly, any obsession) is dangerous. Such a desire can be channeled into highly productive paths, but often goes astray. The corporate leaders in our country have access to extreme wealth, and it shows.
I think you mis-spoke in your “take”. My rememberance is that Jobs sold ALOT of stock after his return but before he was made iCEO. This was to voice his displeasure with the way the company was being run and force the hand of the board to punt the then CEO and put Jobs into this new role.
Close, but not that close.
Jobs received Apple’s stock by late 1996 agreement, and sold all of it by summer 1997.
However, this only had to do with Jobs’ concept that he had to save Apple not for money, but purely for his idealistic reasons.
Once Apple was saved after few years, Jobs accepted quite big stock grant that the board awarded him, which is now valued at more than two billion dollars. And he did not sell any stock since then.
No executive or anyone else is worth paying such high salaries and bonuses. It’s excessive, unnecessary, and extremely condescending to every other employee in an organization who work equally as hard for the success of the same company.
I love Apple’s products, but regardless of the company, I do not agree that executive pay and bonuses need to be so excessive.
You think people are paid for how hard they work?
That’s simply not true.
His salary, like everyone’s, is tied to the value he is able to create for the company (so Apple knows it’s able to capitalize on the investment in him) and his scarcity (there just aren’t that many people out there that have the skills needed to run a large hardware/software/media/retail company, and there are a lot of them that could use his skills). They paid him that much because they figured that was what it would take to make sure he sticks around.
Apple employees are paid the amount they are, because that’s what Apple needs to pay them to have them show up in the morning. If they paid them less, lots would eventually find other work. If they paid them more, it would be an unnecessary waste of resources.
Why didn’t you pay more for your car (or house, or groceries) than you did? You could have offered to pay more. You didn’t, because you paid the going rate. Because offering to pay more than that would have been a waste.
As I stated above, it is a fallacy that “[Tim’s] salary, like everyone’s, is tied to the value he is able to create for the company.” If you believe that, then you are both blind and idealistic.
In truth, few people are truly compensated according to their value. Many people are compensated less, and many are compensated more. The fact is that most workers’ compensation has little connection to actual value produced.
“If you believe that, then you are both blind and idealistic.”
Not to sound too antagonistic, but you’d have to be blind to NOT see the value he (and Jobs) have created.
Lots of companies have shown us that smart people working for a clueless leader can lead nowhere fast (look at Microsoft’s value over the last 10 years, or Dell, or Kodak, or Xerox, or HP, or Sony, and on, and on).
On the other hand, a lot of smart people marching to the right drummer (and if that drummer is smart enough to recognize and hire more smart people) can lead a has-been technology to become the most valuable company in the world.
I think Cook is going to be as close to Jobs as possible in the value-creation department over the next 10 years. Why wouldn’t we pay him enough to make sure he to sticks around?
I’m uncomfortable with such a large bonus. I do realize that we are in competition with other big firms, but that is more money than some countries’ entire budgets. ….. for one person? He did not earn this money. It is simply there to keep him from leaving ……. Hmmmm Kinda like blackmail in a way.
Don’t misunderstand. I would not want him to depart. He is necessary for the continuity and ultimate success of the company. I would like to think that if I was in his position I would have the strength to accept only 1/2 🙂
If he accepted only half, then the rest of it stays with Apple. As a shareholder I guess I’d say ‘great. more for me”, but do you think I deserve that money more than he does?
Agreed.
This is not about Tim Cook, but rather about cultural philosophy about wealth creation and distribution that spawns these types of strategies.
Wisdom is the consciousness of “enough”. Yet, it’s this lack of perspective/understanding that often leads to havoc and cultural disparity throughout the world. Unfortunately, such may be the plight of this 3d, exceedingly polarized reality.
It is the job of the Board of Directors job to never say “enough” with regard to creating more value. There is no “wisdom” in shirking that duty. Whatever they pay Tim Cook, or for a business acquisition, for patents, for pre-ordered iPhone parts, or anything else – the only measure of “enough” is if they are paying more for a resource than it will make back to Apple.
Clearly the quality of leadership at Apple is going to result in either 100’s of billions of $$$ increases or decreases in its value over the next few years. Locking in an executive that appears to make increases much more likely for a tiny fraction of that value is a smart move.
Whatever you make, you are a zillionaire compared to people who lived several thousand years ago. Do you think you are making too much? Would wisdom dictate you ask for lower wages? I am sure some thoughtful person back in those days would have found your lifestyle obscene compared to the struggle he/she had to go through to live every day. But that doesn’t make your lifestyle wrong, assuming you are lawfully earning whatever income you make.
It’s obscene.
John,
Thanks for the clearly expressed opinions. Not everyone appreciates (i.e. understands) the value of posters with different opinions.
I disagree with you for the following reasons. Value creation is not a zero sum game. Giving Tim Cook X amount of compensation does not imply that any 99-percenter got reduced income. So in general, high compensation for some individuals is not automatically a problem – no matter how much that compensation may be.
In this specific case, Apple is loaded with enormous amounts of cash and the stock has increased enormously over the last decade. It appears that trend will continue. So there is ample value to give Tim Cook $400 million without any impact on decisions of what to pay and compensate other employees.
On the other hand, giving Tim Cook a huge incentive to keep growing Apple, given the Board of Directors clearly sees him as being the best person to do that, is intended to ensure Apple continues growing for everyone, including employees and shareholders. So the business benefit of Cook’s compensation flows to tens of thousands of 99-percenters.
Finally, Apple is a public corporation. While 99-percenters may not have as much money to save, when they are in a position to save they can invest in a few shares of Apple and get the same returns that the investment in Cook is meant to produce as 1-percenters. In fact, many 99-percenters with some kind of retirement fund will benefit, because so many funds now include Apple.
The only time CEO compensation is too much is when it is awarded for reasons that are based on insiders lining their pockets instead of for reasons of value creation. Intelligence and ability do not have an upper bound on their worth. Even small differences in skill and insight can result in increased multiples of value creation, that accrue to everyone.
I have to agree with John on this issue, also. I think this was excessive, too!
He’s an unproven CEO. Yes, he’s done well for Apple while Steve Jobs was alive, but he’s is gone now and Apple now relies on somewho may or may not be a “visionary” in his own right. Steve Jobs has probably put Apple in a developement and product strategy for the next five or so years. Cook may still have to make product developement decisions without the Jobs presence and this could still make or break any new product developements that Steve Jobs has/had in the works. Only time will tell if Cook will be an effective leader for Apple. I think he should’ve gotten less in incentives for his first five years. If he proves himself, then maybe some major incentives should be awarded to him at that time. This guy could just stay with Apple for ten years whether his leadership is faulty or not and leave Apple in a lurch of problems and decline.
If Cook recieved this much money, they should give a commensurate incentive amount to Jonathan Ive. He’s the one who, I think, really knows Apple and the product they need to produce to stay at the top!
I agree, giving Sir Jon whatever it took to keep him around is a great idea.
But Tim Cook has long since proven himself. Read up on his history at Apple if you are not aware of what he has done for them since Steve hired him to get their supply chains out of the mess they were in. He has taken on more on more responsibility since then with stellar results.
No one is worth that much money. Sorry MDN that is totally ‘OBSCENE’!