Leaders at world’s most valuable company are downright bargains
It’s hard to find members of billionaire club at Apple, the world’s most valuable company
Finding billionaires in Silicon Valley is easy. Dropbox’s Arash Ferdowsi and Veeva Systems’ Peter Gassner both crossed the threshold this year, and tech fortunes make up a fifth — or about US$1 trillion — of the Bloomberg Billionaires Index.
But tracking down members of the three-comma club at Apple is a less fruitful endeavour even though the iPhone-maker is the world’s most valuable company, with a market capitalization of $879 billion.
Chairman Art Levinson is the only insider to make the cut, and Apple stock accounts for just 20 per cent of his $1 billion fortune, according to regulatory filings. The rest comes from his long tenure at Genentech, where he was chair and chief executive officer, and an early stake in Google.
No other Apple insider comes close. CEO Tim Cook has a $600 million fortune, which reflects a pay program that’s restrained relative to the company’s size and performance.
According to the Bloomberg Pay Index, which ranks the bestpaid senior managers at public U.S. companies, Apple’s leaders are downright bargains. The cost of executive compensation as a fraction of economic profit — defined as after-tax operating profit minus capital costs — was the lowest among the companies whose bosses were the country’s 200 best-paid in the most recent fiscal year.
That has led to relatively small insider holdings, underscoring how few known billionaires the Cupertino, Calif.-based company has spawned since its recovery from the brink of bankruptcy in 1997.
“Apple came back from the dead and that messed up the cap table,” said Gene Munster, a co-founder of Loup Ventures and a longtime Apple watcher. “You didn’t have that very centralized ownership any more.”
That sets it apart from other tech mega-caps, whose founders and occasional employees increasingly dominate the Bloomberg Billionaires Index, which tracks the wealth of the world’s 500 richest people.
They include Amazon.com’s Jeff Bezos; Alphabet’s Sergey Brin, Larry Page and Eric Schmidt; Microsoft’s Bill Gates; and Facebook’s Mark Zuckerberg and Jan Koum. Fortunes associated with these companies account for about 10 per cent of the index.
Other than $3 million in salary and a $6-million target bonus, Cook’s compensation largely comprises a $376-million grant of restricted stock that was awarded when he succeeded Apple co-founder Steve Jobs in 2011 and was meant to pay him for a decade. About one third of the grant is contingent on Apple outperforming the S&P 500 Index. Cook’s deputies each have annual target compensation of about $23 million, most of it in restricted stock.
Alphabet, by contrast, handed the head of its Google unit, Sundar Pichai, nine-figure pay packages for three straight years and gives biennial stock grants worth tens of millions of dollars to senior executives. Tesla Inc. shareholders approved a pay package valued at $2.6 billion for Elon Musk last month. Facebook’s billionaire operating chief, Sheryl Sandberg, collected $24.5 million in 2016. Oracle Corp. has endured years of investor criticism for awarding founder Larry Ellison and co-CEOs Safra Catz and Mark Hurd lavish compensation.
The absence of the uber wealthy at Apple partly reflects the firm’s fractious history with Jobs, who owned a 15 per cent stake in the company at the time of its 1980 initial public offering. That holding would be valued at $132 billion today. But Jobs, who died in 2011, sold all but a single share of his then-$100 million stake after he was ousted from the company in 1985, according to Walter Isaacson’s 2011 biography. He had to rebuild his holdings from scratch when he returned more than a decade later.
His widow, Laurene Powell Jobs, an entrepreneur and founder of Emerson Collective, is the sole Apple representative on the wealth ranking. She’s worth $18 billion with two-thirds of her wealth in Walt Disney Co. and other holdings. She doesn’t work at Apple. Levinson, 68, has never appeared on an international wealth ranking. Apple didn’t respond to requests for comment on the net worth of Levinson and Cook.
Apple co-founder Steve Wozniak held a 7.9 per cent stake in 1980, which shrank over time as he sold options at low prices to mid-level employees and gifted shares to those he felt had been shortchanged. His current stake isn’t a matter of public record because only corporate insiders or shareholders with stakes exceeding 5 per cent are required to report their interests.
“Ownership is not something I think about,” Wozniak said in an email.