Apple is targeting a more than 40 per cent cut to Tim Cook’s pay package in 2023, it said, at the request of the chief executive following shareholder criticism.
Apple’s compensation committee decided to award Cook total “target compensation” of $49mn, down from a target of $84mn a year before, according to a regulatory filing on Thursday.
Cook’s base salary was unchanged at $3mn, as well as a bonus of up to $6mn. But the targeted value of his equity award will fall from $75mn in 2022 to $40mn this year, according to Apple.
The percentage of stock units granted to Cook in his 2023 pay package linked to Apple’s performance made up 75 per cent of his overall equity award, up from 50 per cent the year before, as some shareholders wanted Cook’s incentives more closely aligned with future growth.
Apple said Cook’s pay package is within the “80th and 90th” percentile of CEOs relative to the company’s peers.
In recent years Cook’s net worth has ballooned to $1.7bn, according to Forbes, thanks to his largely stock-based compensation as Apple shares had soared. His actual total pay in 2022 reached $99.4mn, and $98.8mn in 2021, a 500 per cent increase from the $14.8mn he received the prior year.
A majority of shareholders — 64 per cent — gave their approval in an advisory vote on Apple’s executive compensation packages at its annual meeting last year, but the company noted in the filing that it represented a “notable year-over-year decline, as our annual say on pay proposals have received much higher levels of shareholder support for many years.”
Apple said that some shareholders who did not support Apple’s executive pay packages “consistently cited the size and structure of the 2021 and 2022 equity awards granted to Mr Cook as the primary reason for their voting decision”.
But Apple said Cook, the former operations chief who succeeded the late Steve Jobs as CEO in 2011, still had broad investor backing.
It said: “There was also overwhelming support for Mr Cook’s exceptional leadership and the unprecedented value he has delivered for shareholders.”
The company said in the filing the compensation committee’s decision “balanced shareholder feedback, Apple’s exceptional performance and a recommendation from Mr Cook to adjust his compensation in light of the feedback received.”
The filing notes Apple makes these decisions “prior to the start of each fiscal year”, which ended on September 24 2022.
Apple has had a rocky few months following turmoil at factories in China, which resulted in it issuing a rare warning, on November 6, that iPhone production would face “significant” disruptions ahead of the holiday season. Its shares have fallen more than 20 per cent in the past 12 months.
Analysts have downgraded revenue forecasts for the December quarter — Apple’s most lucrative period — with the consensus now anticipating revenues will not match the $124bn earned a year earlier. Such a miss would break a 14-quarter growth streak.
