Apple: CEO Tim Cook to take 40% cut this year

Following shareholder backlash, Apple cut CEO Tim Cook’s “target” remuneration by 40% to $49 million for 2023.

According to a proxy statement submitted to the SEC, Apple CEO Tim Cook came close to $100 million in total remuneration for the second consecutive year, earning $99.4 million.

In response to “input” from unsatisfied investors, the document states that Apple’s compensation committee intends to reduce the top executive’s salary by more than 40% from the target sum for last year. His financial 2023 aim is $49 million.

The Filing Notes

The Remuneration Committee also expects to put Mr. Cook’s yearly target compensation between the 80th and 90th percentiles relative to our major peer group for future years, according to the filing, taking into account Apple’s comparative size, scope, and performance. The committee “considered shareholder criticism, Apple’s extraordinary performance, and a proposal from Mr. Cook to modify his salary in light of the feedback received” before deciding on the substantial pay decrease.

Cook’s 2021 and 2022 compensation

Cook’s 2022 remuneration was primarily in the form of a stock award, with a basic salary of $3 million, similar to 2021 when he earned $98.7 million. His stock reward came to a total of $83 million in 2022.

In September 2020, Apple revealed a stock award for Cook that would last until 2025. On the first day of Apple’s fiscal 2021, which began at the end of September, Cook was presented with it. If Apple were to reach all of its goals when Cook’s stock grant was approved, he would have received 1 million shares, valued at around $114 million at the time.

A significant consulting firm and other shareholders urged a no vote on the agreement last year after learning about Cook’s 2021 remuneration. Public corporations are set up so that shareholders can vote on CEO compensation plans, albeit the effect of a “no” vote on compensation varies depending on the bylaws. In the end, only 64% of shareholders approved of Cook’s compensation plan, a much less resounding endorsement than most top executives obtain.

Apple amid covid

For the overall tech sector, last year was unquestionably rougher than 2021 – possibly its worst year since the 2008 financial crisis. Apple performed marginally better than some of its fellow tech giants, but it nevertheless witnessed a more than 20% decline in its share price as a weakening economy, the Covid upheaval in China, and a number of other problems made operations difficult.

Other members of the senior exec team

According to the proxy, other senior executives made nearly equal salaries in fiscal 2022. The overall compensation for CFO Luca Maestri, GC Kate Adams, SVP of Retail + People Deirdre O’Brien, and COO Jeff Williams was around $27.2 million.

Criticism over Cook’s previous compensation package

Apple has come under fire for Cook’s prior compensation package from organisations like Institutional Shareholder Services, but a majority of shareholders approved it last year.

Leading consulting agency ISS expressed displeasure with Cook’s stock continuing to vest after retirement and the fact that only half of the rewards were based on performance indicators like the company’s share price.

Tim Cook’s equity

In 2022, the value of his equity reward was $75 million. Depending on how the company’s stock performs in 2023, Cook’s actual total remuneration may change.

The $49 million in target pay includes a $40 million equity award value in addition to the same $3 million salary and $6 million bonus as in 2022.

Cook, 62, has promised to donate his money to good deeds.

CEOs rarely suggest that their own remuneration be reduced. According to Bloomberg data, executive remuneration in 2021 reached a record high, reflecting the increasing opulence of pay packages.

However, such rewards are facing growing opposition from shareholders. In 2021, a record number of so-called “say-on-pay” votes were defeated, which might have been a reflection of shareholders’ dissatisfaction with how businesses performed during the recession.

Read More: Trusted Trade Program between UK and EU; Post-Brexit.