Tim Cook's Pay Was $1.5 Million Less in 2016 as Apple Missed its Own Performance Targets

[MrX8503]

That’s a reasonable explanation. Although, I would expect a signing bonus to be much larger than a paltry $95,000.

Tim has a pretty nice stock option package. $378MM, awarded in 2011. Half vested in 2016, the othe half to be vested in 2021.

But at this level, it’s not about the salary and bonuses. It’s not about the money at all. When you have this much, you have all that you “need.” It’s about the game. The game of running the company.

She did get a huge bonus, like in the millions. I'm not sure if the 95k is some other extra recurring incentive.

That's true about the money. It's crazy how much they make to the point where it doesn't matter anymore.

 

[Paul Dawkins]

It's his leadership that is responsible for putting all the people and processes together to make this possible.

Or did you think that something like Apple Pay just magically comes together by itself?

Of course it didn't just happen, but that doesn't mean he is responsible for it happening. There still are few professionals at Apple that have ideas and can push them.


And lets be honest he is not a product guy. Apple needs a product guy. He is political correctness and gay rights activist. oh and diversity. Must care about diversity.

 

[itguy06]

They've been incredibly profitable under his leadership, why would they fire a successful CEO who has increased profits, marketshare?

I may not be a fan of him, but using the metrics that business people use to measure success/failure. He's been an unabashed success.

What marketshare has he increased? iOS marketshare has been going DOWN as of late.
Mac marketshare is stagnant or going down too.

As an Apple stockholder I'm voting against Tim. We need an innovator to shake things up. While Tim is a nice guy, he's not the right person for the job.

 

[DaveOP]

His salary is peanuts compared to his stock package -- a sweet deal he re-negotiated with the board shortly after SJ's death. Please don't feel sorry for him, he deserves no sympathy.

I didn't say I felt sorry for him, but he could be making astronomical money, given that he is the CEO of the most profitable company in history.

 

[Paul Dawkins]

Sure. Every year there's just someone pressing the "new phone" button, and out pops a phone from a non-descript rectangular machine in a corner. The phone, if left alone, then slowly turns to solid gold over time.

God, being CEO must be so easy. No wonder they don't hand out these positions along with free candy to everybody.

When Steve was CEO he would call people in the middle of the night when he got an idea and then next day they would have to fight him to prove he is nuts and he would see he is nuts and change his mind and they would use his inout and eventually you got to use Mac and iPod and iPhone. What does Cook now about that?

it's not just empirical knowledge that makes you a great CEO, it's also culture.

Cook probably hasn't done any drugs in his life - how can you trust him as a ceo.

 

[Carnegie]

Is there a performance-based reason Angela Ahrendts amde $95,348 more than her male counterparts, other than Apple trying to remove the “glass ceiling” and even out the compensation averages?

There are a number of things which are counted in the total compensation beyond their base salaries, stock awards and non-equity incentive compensation which, in some cases, vary between them. In Mrs. Ahrendts' case she received relocation expenses (related to her moving as a result of her hiring), some of which were paid in 2016.

All of the executives listed, other than Mr. Cook, had the same base salary ($1 million), stock award ($20,000,083), non-equity incentive compensation ($1,790,000) and life insurance premiums ($1,561). For the most part, the only differences came from 401(k) contributions and the relocation expenses I referred to.

 

[Dan DeWilde]

Probably because it wouldn't work the other way around.

However, as research has repeatedly shown, when tasks involve even rudimentary cognitive skills, LARGER rewards lead to POORER performance. Thus based on sound research, executives subject to large financial rewards are inhibiting the performance of their firms.

 

[2457282]

Considering what they've not done this year, they've done surprisingly well as a company in terms of share price and profits.

I'm really hoping the lull in Macs is due to an overhaul to rival the PPC/Intel changeover. My personal guess is they're changing over to chips of their own design and leaving Intel behind and it's taking longer than expected.

i have been hoping for a change of chips for a while, but have seen no indication to suggest that it is on the way. There have also been no clues in the OS (and you would need to be building in some time of emulator/translator to support all the apps). So as much as I hope you are right, I am not holding my breath on this one.

 

[wyarp]

Holy cr@p I never knew they earned THAT much! No wonder they charge so much for products! Somewhat baffling though that all the other executives earned around $22m but the CEO 'only' earned $8m. How does that makes sense...

 

[slimothy]

Yes, but note that of Apple's executives, he is making less than half of what the others make. Considering he is the CEO, that says something.

Honestly, I think the entire executive team should have a similar performance-pay mechanism that Tim has.

I guess my post can be misconstrued a little. 8 million is not a whole lot for a CEO of any company, much less Apple. I agree, something seems off about how much he got vs. some of the other executives.

 

[niploteksi]

Poor guy... going to have to pawn his car to afford rent.

 

[Pilgrim1099]

I've grown weary of this smug, pontificating buffoon. I hope this salary is the last he'll get, and Apple will promptly change management.

They're going to have to. FAST. If they stay put, the company will stagnate and get out maneuvered badly by the competition. I'm seeing and hearing things coming out of the horizon from other competitors that should frighten Apple big time this year. The only way to get ahead is to have a big corporate shake up.

It all starts with accountability and a major kick in the a$$.
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Holy cr@p I never knew they earned THAT much! No wonder they charge so much for products! Somewhat baffling though that all the other executives earned around $22m but the CEO 'only' earned $8m. How does that makes sense...

Because he was voted the 'best value CEO of the year'.

 

[TigerWoodsIV]

See below :

Interesting that this calculation left out all the vesting options, given the magnitude of them, but I suppose they technically weren't new compensation for this year. Makes more sense now.

 

[The Game 161]

must be tough for him....

 

[Chupa Chupa]

Tim Cook will blame poor sales on everything except the lackluster product catalog. I've given up on Tim. Hopefully the board will too. I'm not sure who could take the reigns but TC has certainly lowered the bar of success for anyone else with an actual passion for tech, not just the money it brings in.

 

[Soccertess]

Angela made $23 million for what? Turning Apple into a fashion company? The watch that isn't selling as well?

Don't forget where it all started. Apple is a computer company, not a fashion brand. The two will not converge once computing power gathers pace again.

That was my first thought! WTF is with Angela! If she left Apple, would anyone notice? Would anyone care? Would the design of products change?

The other person is Dan Riccio. The only products that are getting updated on a regular basis are dongles. Kidding aside, the hardware updates have been mediocre at best, but great chip development though I give him that!

 

[TechZeke]

If you read the whole article, it looks like Tim gets paid a lot less than other executives at Apple. So many angry people in here just posting negativity anytime his name comes up. He does not need to tie his salary so much to incentives, and I bet his 3 million base is significantly lower than other, much less successful CEO's.

Boohoo. His base salary is more than I'll probably make in my entire life.

I'd happily be paid less than comparable CEOs if it was 8-10 mil per year.

 

[needsomecoffee]

From the Bloomberg article noted in a previous comment Tim's salary drop is simply because his >$130MM stock awards that vested previously: "Cook’s $8.75 million disclosed compensation for fiscal 2016, including a $3 million salary and $5.37 million cash bonus, doesn’t account for 1.26 million shares delivered from the big award he received after becoming Apple’s CEO. They were worth about $136 million 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."

Link:
https://www.bloomberg.com/news/arti...see-pay-drop-in-2016-as-ceo-reaps-145-million

 

[Carnegie]

Craig Federighi is the only executive officer who has never had his salary and stock grants disclosed in an SEC filing. I wonder why? I'm not sure if who they choose to disclose is based on importance but I'd certainly rank him above Dan Riccio. What does Riccio actually do? Jeff Williams owns Apple Watch and Johny Srouji owns all of Apple's silicon. What is Riccio's responsibility besides not updating the Mac Pro and Mac mini?

Mr. Federighi's stock awards, and transactions related to them, are routinely disclosed via SEC filings. Here is the most recent one.

 

[BlueMoon63]

I didn't say I felt sorry for him, but he could be making astronomical money, given that he is the CEO of the most profitable company in history.

I think Tim gives away 90-95% of all his earnings to non-profit groups. It's something crazy like that.

 

[576316]

Okay, first of all, executive pay in top countries is nothing short of outrageous - how the other half life, eh? But also this is good. Obviously it's regular business practice, but at least Apple's stupid decisions lately are beginning to hurt them where it matters. Something's gotta be done.
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I think Tim gives away 90-95% of all his earnings to non-profit groups. It's something crazy like that.

No. He takes most of his pay as stock. He said he would give away 95% of his wealth over his lifetime.

 

[Mac4Brains]

Terrible CEO based on what exactly? What is it you think a CEO is supposed to do? No snark, genuine question. Not saying you are, but a lot of people on this forum seem to be confused about what the function of CEO encompasses.

Apple has had more product recalls and system bugs under Tim then Steve.

The recent fiasco with the MacBook Pro's power resulting in consumer reports saying it is not worth it.
The lack of a 3.5mm headphone jack on the iPhone
iPhone hardware updates every year while Mac updates are lagging

1. MacPro has not been updated in three years now
2. Mac Mini in over two years
3. MacBook Air in under two years
4. iMac in a year and a half

While the

1. iPhone get updated every year like clockwork
2. Apple Watch about twice a year

Do you think things would have been the same under Steve? Yea Apple is more profitable now. Does anyone but the share holders give a darn about this? The people buying Apple products care more the products themselves and Apple's rep for quality is starting to slip with Tim. That alone will have much more long term ramifications to the company then any quarterly report will.

 

[Pilgrim1099]

In my view, Cook probably was the right person for the job when he was hired. Apple needed someone who knew how to balance stability with structural change while positioning Apple for a sustained "big company" future. Cook did that. Now, what Apple needs is quite different: it needs a restoration of its "startup" ethos and it needs excitement. And it needs these things quickly: a widespread defection from a significant part of the "ecosystem" is now possible and would be extremely damaging. I believe Apple should celebrate what Cook has accomplished and respectfully show him the door.

Agreed on these points. However, I recall reading somewhere that there was someone else Jobs had in mind to replace him and the Board of Directors didn't approve it, recommending Tim Cook. Steve had no choice but to pick him. I wish I can remember where I saw it but it was on MR months ago. I know what I saw so my memory is not fooling me. I don't know who Steve had in mind originally, though but I have my suspicions.

Had the Board backed off and let Jobs pick the original choice, things probably would have looked somewhat different at Apple today instead of the other guy.

But yes, 2017 is the year they really have to show Tim the door, along with the other execs. The defection from Apple's ecosystem is already happening and the damage has been done. It's bleeding out to Google and Microsoft, as far as I believe.

 

[mi7chy]

As we learned from the reemergence of Microsoft is that the only fix for stagnation is to replace old thinking. The Ballmer crew was replaced and now Microsoft has surpassed Apple. For Apple to be competitive again Cook, Schiller, Cue, etc. need to be replaced. If not, another company will eventually occupy the space ship building.

 

[TigerWoodsIV]

He essentially has solved the "big company" problem for Apple, which in a nutshell is that large companies can't achieve the same growth as smaller companies, all else being equal. Thus, and especially in the tech sector, companies that grow very quickly as Apple did often plummet after that. So Cook should get credit for restructuring Apple and its finances to sustain the business legacy that Jobs left. He also brings tremendous supply-chain expertise (a huge thing for Apple, which routinely must acquire components in insanely high numbers, from all corners of the world, in near secrecy and extremely quickly) and has pushed into emerging and difficult markets very successfully. And it's not insignificant that Apple under his leadership has championed data secrecy and human rights in ways that have made a difference. All of this supports your point that Cook has been successful in many ways related to Apple's business.

But is that enough? I would argue that for Apple, it is not. First and most importantly, Apple's legacy is one of innovation, technically and culturally. Although Cook's Apple has innovated to a certain extent with the Apple Watch and the AirPods, none of this is "disruptive" in the way that Jobs achieved multiple times. Worse, Apple is squandering obvious advantages nearly everywhere one looks. Given how many people viewed the MacBook Air as a near-perfect consumer laptop, it's rather astonishing how Apple failed to realize many of that product's strengths when it created the MacBook. The same is true of the MacBook Pro line: the new computers are quite nice in many ways but they simply failed to deliver what the target audience wanted and expected to see. Software like Aperture (Apple's best software product ever, in my opinion), which could have served as a foundation for making Apple a truly dominant imaging/photography platform (including for consumers), was clumsily abandoned. Long-awaited products like the Apple TV were released with glaring issues, many of which ignored real-world concerns and some remain to this day. I of course could go on.

In addition, Apple's product lines are becoming increasingly confused and confusing -- one of the issues that nearly destroyed Apple just before Jobs returned. Who are the computers in Apple's laptop line targeted toward? It's increasingly unclear. What standards is Apple pushing? Lightning, one might have thought after the iPhone 7, only to see the laptops include a headphone jack and appear to advance other ports. Also, contrary to much popular mythology, Jobs was a proponent of industry-standard technology (particularly ports) where Apple's "invented here" offerings didn't offer a clear advantage. It was Jobs' Apple, after all, that championed USB as the replacement for several legacy ports when Apple released the original iMac. Cook could have done the same thing by using USB-C instead of Lightning on the iPhone, and this would have eased much of the headphone jack concern (because any new headphones people had to buy would at least rely on what Apple was advancing as an industry standard, available to all). Jobs also priced Apple's products fairly -- there were many instances in which the market was favorably impressed by a product priced lower than expected (the original iPad was the best example of this) and even where an "Apple Tax" existed, users understood why they were paying more. Not so now. And those things that Jobs didn't do well -- the cloud, for example -- have fared no better under Cook.

In my view, Cook probably was the right person for the job when he was hired. Apple needed someone who knew how to balance stability with structural change while positioning Apple for a sustained "big company" future. Cook did that. Now, what Apple needs is quite different: it needs a restoration of its "startup" ethos and it needs excitement. And it needs these things quickly: a widespread defection from a significant part of the "ecosystem" is now possible and would be extremely damaging. I believe Apple should celebrate what Cook has accomplished and respectfully show him the door.

I still think it's a little early for what you said in the last line of your post. Other than that, I think your whole post is on point. One thing about the post you replied to, "business people" do look at the metrics that have made Apple Apple and are impressed, but stock valuation is heavily related to what you're expected to do in the future. Apple was up at or over $130 last year iirc, but while they're successful, people in the finance world realize you can only live on your reputation for so long. Eventually, if there are more innovative products out there, the market will shift. Tim set up Apple well from a non-innovative perspective as far as I can see. I really hope some of that startup type innovation you mention comes back to Apple and in a hurry. I think if we're saying the same things next year then he needs to go before it's too late. The demise of Apple wouldn't happen any time soon because most people don't follow products as closely as the people on these forums and will continue to buy Apple because it's Apple, but eventually if Apple falls behind enough, people will move on. I hope that doesn't happen, because an innovative Apple would be great to see. I miss the days of exciting product announcements and not incremental or incomplete upgrades.