Apple Awards Tim Cook 1,000,000 Shares of Stock as CEO Bonus

[iSee]

What happens if Tim Cook is fired in 2 years? Or if he ends up getting demoted?
Does he still get the shares?...

The article covers this when it quotes the statement from Apple's board (I can understand why you ask, though. They use corporate-speak, which is not at all clear if you aren't used to it as I unfortunately am):

Fifty percent of the restricted stock units are scheduled to vest on each of August 24, 2016 and August 24, 2021, subject to Mr. Cook's continued employment with Apple through each such date.

Translation: he gets 1/2 million shares if he's still working for Apple in five years and the remaining 1/2 million shares if he's still working for Apple in 10 years.

... Because I doubt many CEOs would sign a deal where they would lose these if the board kicks them out or demotes them.

And will the new CEO also get the same kind of bonus? And so on?

If the iPhone 6, the iPhone 7, and the iPhone 8 all are underwhelming, will the board still keep Cook as CEO?

This isn't his only form of compensation. They are basically letting him know what his bonus for good performance will be ahead of time. If he doesn't do well as CEO he'll be fired before he can collect the bonus.

 

[elgrecomac]

Hmmmm...

This is far too much money for one person to receive as a bonus.

I thought I was the only one thinking this...

 

[the8thark]

I thought I was the only one thinking this...

Most people think it.
But very few people have the balls to say it.

 

[AaronEdwards]

The article covers this when it quotes the statement from Apple's board (I can understand why you ask, though. They use corporate-speak, which is not at all clear if you aren't used to it as I unfortunately am):

Translation: he gets 1/2 million shares if he's still working for Apple in five years and the remaining 1/2 million shares if he's still working for Apple in 10 years.

This isn't his only form of compensation. They are basically letting him know what his bonus for good performance will be ahead of time. If he doesn't do well as CEO he'll be fired before he can collect the bonus.

No need to explain, I understand how it works.

I specifically asked about what would happen in this specific case if he gets fired due what Skype did a couple months ago. I get from your answer, if you know the entire details, that the board could fire him and avoid having to give him the shares.

 

[Sjhonny]

I wonder if he plans to take Steve's $1 salary?

Somehow I don't think he will.

Jobs makes billions a year thanks to the dividend on his Disney/Pixar shares. I'm guessing Cook isn't in the same financial position as Jobs.

----------

Most people think it.
But very few people have the balls (or clitoris if female) to say it.

Why? That's a bonus of about 40 million a year. Jobs made 2.8 billion last year, only with his share in Disney.
People should be able to make as much money as they want/are able to. Just let them pay more taxes (relativity).

 

[mdriftmeyer]

The new CEO gets a $383 MILLION dollar bonus, while the workers over in China get $3.83 a day. And people wonder why many of us despise large corporations.

He gets 1,000,000 restricted shares that don't vest for 10 years and only vest at the value of the company in 10 years, which means his incentive is to make sure Apple evolves.

 

[hindmost]

America's Most Powerful Gay?

Are you inferring that there is more to know about Tim Cook than has been reported in MacRumors? Please please tell us more. Don't be so coy.

And then you hint about the powers that be. Is that the board or is there something above even the board and higher than Steve.

Could Steve have chosen Tim by himself or had the power to block some other choice. Tim was number two for ages, was anyone else even considered?

BTW did you know Jony Ives has twin daughters and that Steve Jobs has these daughters. How cool is that.

============================
The only thing 'more' about Tim Cook that may not be reported in MacRumors is that the gay press organs are crowing that he is now the most powerful gay man in corporate America now. He is still in the closet for what that's worth. Not my words....just Google to find the info.

 

[janil]

No, his salary was only 800k lsat year. His total compensation was 58mil last year which comprises salary, vested stock, cash bonuses, etc. Salary and total compensation are different things and can vary greatly. Most of his earnings derive from outside his nominal salary base.

And it's done this way in part to ensure that executives pay a lower percent of their income as taxes than most people in the middle class (as eloquently expressed by Warren Buffet recently)

Steve Jobs getting $1/year in salary was a joke... it made him look good (oh, look, he's selfless!) but also was beneficial for him in that it lowered his federal tax rate because so much of his income was generated by capital gains-- and it also meant that he didn't contribute anything for payroll or medicare tax.

 

[AidenShaw]

============================
The only thing 'more' about Tim Cook that may not be reported in MacRumors is that the gay press organs are crowing that he is now the most powerful gay man in corporate America now. He is still in the closet for what that's worth. Not my words....just Google to find the info.

Nothin new here, back in April Out Magazine named Cook the most influential gay man in America.

Perhaps since you read the gay press you could come up with a better description than "still in the closet", since Tim's closet door has been busted wide open for quite a while. Just because he doesn't "come out" on prime time television like Ellen doesn't mean that he's in the closet. Maybe next year Tim could be a grand marshall of the San Francisco Pride Parade - that would be interesting.

 

[jnpy!$4g3cwk]

He gets 1,000,000 restricted shares that don't vest for 10 years and only vest at the value of the company in 10 years, which means his incentive is to make sure Apple evolves.

If Apple continues to develop one innovative product after another, that ordinary people want, can afford, and find much more usable than products from other companies, over the next 10 years, then, it will be worth it. If Apple continues to develop stuff people can use to make their lives better, and, profit at the same time, then that is the good side to capitalism. And if Tim Cook fails to deliver, then, when he leaves, sure I hope the board doesn't reward him with $50M as a going away present ...

I'm much more concerned about all the huge bonuses and severance packages handed over to all those CEOs who buy, sell, and sometimes shutdown profitable and viable business units, as if they were so many playing cards, without ever being held accountable for the overall long-term outcome for all the shareholders, debtors, employees, and retirees, who all have a financial stake in the continued success of a company.

 

[hobo.hopkins]

Wirelessly posted (Mozilla/5.0 (iPhone; CPU iPhone OS 5_0 like Mac OS X) AppleWebKit/534.46 (KHTML, like Gecko) Version/5.1 Mobile/9A5302b Safari/7534.48.3)

No, his salary was only 800k lsat year. His total compensation was 58mil last year which comprises salary, vested stock, cash bonuses, etc. Salary and total compensation are different things and can vary greatly. Most of his earnings derive from outside his nominal salary base.

And it's done this way in part to ensure that executives pay a lower percent of their income as taxes than most people in the middle class (as eloquently expressed by Warren Buffet recently)

Steve Jobs getting $1/year in salary was a joke... it made him look good (oh, look, he's selfless!) but also was beneficial for him in that it lowered his federal tax rate because so much of his income was generated by capital gains-- and it also meant that he didn't contribute anything for payroll or medicare tax.

Yes, I'm sure that Steve Jobs will be a huge drain on our Medicare system.

 

[powers74]

Wirelessly posted (Mozilla/5.0 (iPhone; U; CPU iPhone OS 4_3_5 like Mac OS X; en-us) AppleWebKit/533.17.9 (KHTML, like Gecko) Version/5.0.2 Mobile/8L1 Safari/6533.18.5)

I'd be happy with an extra 8K a year.

 

[TheAppleGeek]

Holy crap.

 

[hindmost]

Nothin new here, back in April Out Magazine named Cook the most influential gay man in America.

Perhaps since you read the gay press you could come up with a better description than "still in the closet", since Tim's closet door has been busted wide open for quite a while. Just because he doesn't "come out" on prime time television like Ellen doesn't mean that he's in the closet. Maybe next year Tim could be a grand marshall of the San Francisco Pride Parade - that would be interesting.

As I noted in my comment the 'closet' comment was not my words, it was the term used in the article I saw on Google. And i do not 'read the gay press' per se....like a lot of the Apple fan base I was reading up on Mr. Cook to see who he was and what to expect.

 

[grindcor]

He should use it to buy firearms for the poor.

Especially once they find out that he paid in a lower tax bracket on his capital gains than they pay on their minimum wage salary. Doesn't this just make you want to go buy an iPhone 5 so you can line someone else's pocket with unfathomable quantities of money you won't see in your entire worthless life? This is definitely some kind of way we've evolved to measure success...

 

[Eluded]

I think it's about time Steve gets some him time after everything this company has been through

 

[mdriftmeyer]

If Apple continues to develop one innovative product after another, that ordinary people want, can afford, and find much more usable than products from other companies, over the next 10 years, then, it will be worth it. If Apple continues to develop stuff people can use to make their lives better, and, profit at the same time, then that is the good side to capitalism. And if Tim Cook fails to deliver, then, when he leaves, sure I hope the board doesn't reward him with $50M as a going away present ...

I'm much more concerned about all the huge bonuses and severance packages handed over to all those CEOs who buy, sell, and sometimes shutdown profitable and viable business units, as if they were so many playing cards, without ever being held accountable for the overall long-term outcome for all the shareholders, debtors, employees, and retirees, who all have a financial stake in the continued success of a company.

Agreed and Apple hopefully begins to set a new trend with the way the structured Tim's incentive package proportional to how Apple produces it's own success.

 

[SirHaakon]

Suicide rate in the USA is about four times higher than suicide rate among Foxconn employees. So what does that tell you?

That we have extreme class disparity because of our greedy business practices like giving CEOs $383 million dollar salaries.

 

[MagnusVonMagnum]

He gets 1,000,000 restricted shares that don't vest for 10 years and only vest at the value of the company in 10 years, which means his incentive is to make sure Apple evolves.

Oh wow! That changes everything! What he got was worthless, after all!

I think some of you don't even comprehend how much money that is or you wouldn't continually make light of it. There are hard working designers, engineers and yes factory workers that make Steve's vision a reality and they get less than pocket change compared to the top business managers. If they even open their mouths for a second in a bar, they get fired to boot. Yes, I'm continually amazed how CEOs and the like think their work is worth 100,000x more than everyone else's work. "I" isn't in the word team.

 

[Cartaphilus]

Sure the CEO takes the heat for all that happens with the company when something goes wrong, but he is FAR from the one who makes decisions.. I hate to say it but the CEO is nothing more than a figure head for the company.. Anything major has to go by the board of directors because THEY are the one really running the company.. The CEO works for them, the board is the one's that own a majority in the company..

While it's true that the Board of Directors must approve many corporate actions, it is also true that I must approve all my wife's expenditures. In reality, both rights of approval are largely ceremonial, if not illusory.

In very few public companies do the non-executive members of the Board of Directors own a significant fraction of the outstanding shares, let alone a majority. In any event, it is rare that a board ever contributes meaningful input to operating decisions, and if a particular board member does have some expertise that leads him to wish to make a suggestion, it will be in private with the CEO and not in a board meeting. The decisions that made Apple products what they are were never made by any vote of the Board of Directors.

For many reasons, it is the CEO who is the most powerful actor in the modern American public company, and by far the most important decisions made by board members are the selection of the CEO, arranging CEO compensation, providing for CEO succession, and firing the CEO.

The board certainly becomes very important in certain situations, and they have serious responsibilities under the law, but few would attribute the success of any modern public company to the non-executive membership of its board.

----------

Most people think it.
But very few people have the balls (or clitoris if female) to say it.

Apparently economics and finance are not the only subjects neglected in our schools.

 

[Bytor65]

I think some of you don't even comprehend how much money that is or you wouldn't continually make light of it. There are hard working designers, engineers and yes factory workers that make Steve's vision a reality and they get less than pocket change compared to the top business managers. If they even open their mouths for a second in a bar, they get fired to boot. Yes, I'm continually amazed how CEOs and the like think their work is worth 100,000x more than everyone else's work. "I" isn't in the word team.

Did it take you until today to figure out that life isn't fair and that people on top are paid ridiculous amounts of money while most of us would need to work 500 lifetimes to earn what they get in one year. Oh and you need to work on your math skills. The average Apple employee probrable earns 100K+, even if Cook earns 100 Million, that is 1000 times more, not 100 000 times.

I think Cook is more valuable than numerous celebrity athletes with 100 million+ contracts to chase a ball around a field. Or movie star getting 20 million/movie.

The simple reality is, that if they didn't give Cook a huge compensation package, some other company might try to scoop him, just to disrupt Apple.

 

[SirHaakon]

The average Apple employee probrable earns 100K+

Really? I didn't know Foxconn workers were paid that much. Heck, that Apple retail job in the mall seems a lot more appealing now! What's that you say, you were only talking about the "corporate" workers? Well guess what, these are the people who make and sell the products... it's an utter shame that they aren't compensated as such.

 

[Navdakilla]

Ballin outta control!

 

[Bytor65]

Really? I didn't know Foxconn workers were paid that much.

Foxconn workers are not Apple employees. It should be obvious that they are Foxconn employees.

 

[Cartaphilus]

And it's done this way in part to ensure that executives pay a lower percent of their income as taxes than most people in the middle class (as eloquently expressed by Warren Buffet recently).

The value of the unrestricted stock that Cook receives as a result of the grant of the RSUs will be ordinary income to him in the taxable year when the shares are delivered, and he will pay taxes at the same rate applicable to wages or salaries on whatever the fair market value of the shares is as of the delivery date. Any increase in their value after that time will be treated as capital gain and, providing he satisfies the then-applicable minimum holding period and the law remains unchanged, taxed at a lower rate.

Under current law a taxpayer like Warren Buffet, who derives most of his income from dividends on stocks he owns, and from gains on stock he sells, will be subject to a lower tax rate than a taxpayer like Tim Cook, who over the course of his career will derive much of his compensation in a form that will be characterized as ordinary income.

Reasonable people may disagree on whether taxing dividends and capital gains at a lower rate than ordinary income is good policy, but choosing to issue RSUs to Tim Cook instead of paying him today's market value of the same number of shares, had nothing at all to do with trying to reduce Cook's tax bill. That decision was made purely to encourage Cook to stay with the company and increase shareholder value. If Cook is successful, the board will be delighted to deliver shares to him; if he is not, the Board retains the right to terminate his employment before Cook receives any shares.