Apple’s new CEO gets an extra million shares (worth $383 million)
Shortly after Steve Jobs stepped down from Apple’s helm and Timothy Cook was named the successor at the end of August, Cook was gifted with one million shares of Apple’s stock, which is currently worth almost $400 million. But Apple is one of the biggest companies in the world — and recently even overtook ExxonMobil as the largest company. What are the implications of Apple’s compensation policy, and will this bonus incentivize Cook to stay for the long haul?
September 22 2011 by ChiefExecutive.net
It’s been a good month for Timothy Cook, Apple’s new CEO. In addition to getting the top post at the most highly valued technology company in the world, he was awarded an additional 1,000,000 shares of Apple’s stock which, even if they don’t increase in value, are worth $383 million on August 26th.
Interestingly, these awards vest over a long period of time: half in 5 years and the other half in 10 years; this gives Mr. Cook added incentive to stay with Apple for the long run, even though he is a wealthy man already. He earned $58 million in 2010 alone: a base salary of $800,000, a $5 million bonus and stock awards totaling $58 million. Other elements of Mr. Cook’s new compensation plan haven’t yet been announced, so we don’t yet know if his base salary will remain as it is, go up, or go down to $1 per year, which is what Steven Job’s base salary was.
While many argue that Apple’s policy of providing low salaries with rich stock awards aligns management with shareholders and has contributed to Apple’s impressive stock gains, it does raise questions about scale. Would Mr. Cook not have taken the job if the 1,000,000 share grant was options on the increase in value vs. a stock award, or if the stock award was worth $100 million vs. $383 million? That’s for the Apple board to decide but it does seem excessive.
For more information about CEO compensation practices at public and private companies, go to www.ChiefExecutive.net/ceocomp.