Cook gets pay­ment wind­fall from Ap­ple

The Star Early Edition - - BUSINESS REPORT INTERNATIONAL - James Davey

AP­PLE’s top ex­ec­u­tives saw their com­pen­sa­tion fall last year, while chief ex­ec­u­tive Tim Cook had his big­gest pay­out yet from his record 2011 award.

Cook’s five top lieu­tenants re­ceived about $22.8 mil­lion (R314m) each for last year, ac­cord­ing to a proxy state­ment filed on Fri­day.

The pay pack­ages in­cluded $2.8m in salary and cash bonus and $20m in equity awards.

Cook’s $8.75m dis­closed com­pen­sa­tion for fis­cal 2016, in­clud­ing a $3m salary and $5.3m cash bonus doesn’t ac­count for 1.26 mil­lion shares de­liv­ered from the big award he re­ceived after be­com­ing Ap­ple’s chief ex­ec­u­tive. They were worth about $136m when they vested – the big­gest dis­tri­bu­tion Cook has re­ceived in a sin­gle year from the award.

The value of the shares isn’t in­cluded in the proxy fil­ing’s sum­mary com­pen­sa­tion ta­ble since it only lists new equity grants.

Wind­fall

The wind­fall is a huge jump from 2015 when the chief ex­ec­u­tive re­ceived $10m in salary and bonus, and $64.2m in stock from his 2011 pro­mo­tion award. The bulk of the shares for fis­cal 2016 weren’t tied to per­for­mance and there­fore not at risk of for­fei­ture even as Ap­ple re­ported its first an­nual sales de­cline since 2001.

Re­cent ver­sions of the iPhone, Ap­ple’s big­gest rev­enue gen­er­a­tor, haven’t in­spired au­to­matic up­grades the way ear­lier models did. Com­peti­tors in China are churn­ing out cheaper de­vices while de­vel­oped coun­tries are reach­ing sat­u­ra­tion point.

The board granted Cook 1m re­stricted shares set to vest in two in­cre­ments over a decade when he took over the Cu­per­tino, Cal­i­for­nia-based com­pany in 2011. In 2013, the com­pen­sa­tion com­mit­tee tied one-third of the shares to the com­pany’s rel­a­tive stock per­for­mance ver­sus the S&P 500 at Cook’s own re­quest and sched­uled the shares to pay out an­nu­ally.

A year later, the com­pany made a 7-for-1 stock split.

Cook got all 280 000 per­for­mance-linked shares ear­marked for 2016 since Ap­ple’s stock re­turn over the three years ended Au­gust 24 was in the top third among busi­nesses in the in­dex. He also re­ceived 980000 shares tied to him re­main­ing on the job. Com­bined with pre­vi­ous pay­outs, Cook has col­lected stock worth more than $350m since he be­came chief ex­ec­u­tive. He’s also on track to get half of the shares tied to rel­a­tive stock re­turn and sched­uled to pay out in Au­gust this year and next year.

The iPhone-maker’s 2016 calendar year stock re­turn in­clud­ing div­i­dends topped 12 per­cent, beat­ing al­most half of S&P 500 busi­nesses.

Equity awards for se­nior vice-pres­i­dents An­gela Ahrendts, Eddy Cue, Luca Maestri, Dan Ric­cio and Bruce Sewell are also par­tially tied to Ap­ple’s rel­a­tive stock re­turn over three years. The re­main­der typ­i­cally vests within fourand-a-half years after they’re granted. The cash bonuses paid out be­low tar­get as the com­pany missed net sales and oper­at­ing in­come goals.

Ab­sent from Ap­ple’s com­pen­sa­tion dis­clo­sures is chief de­sign of­fi­cer Jony Ive.

The lat­ter de­signed Ap­ple’s iconic prod­ucts such as the iMac, iPod and iPhone.

Com­bined with pre­vi­ous pay­outs, Cook has col­lected stock worth more than $350m

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