Apple CEO Tim Cook will be receiving a rare pay cut this year, and according to media reports, this is something that Cook himself requested. Provided the shareholders approve of the decision at the upcoming Apple Investor Day on March 10, Cook will receive a pay cut of more than 40% this year.
According to a filing by Apple with the SEC, the pay cut is at Cook’s own recommendation, which will reduce the total compensation received by Apple’s chief executive to $49 million. This is a steep drop from the $84 million that was Cook’s target compensation last year, even though he ended up exceeding the target. Apple’s board praised Cook’s performance, adding that the company had confidence in Cook’s long-term strategic decisions.
Last year, he exceeded the target of $84 million in total compensation to receive a total of $99.4 million, which includes about $83 million in stock awards and a bonus. The other benefits he received last year include retirement plan contributions, security, personal air travel, and over $46,000 in vacation cash-out. In 2021, his total pay package amounted to $98.7 million.
As part of the changes and the pay cut, the percentage of stock units awarded to Cook and tied to Apple’s performance will increase from 50% in 2022 to 75% in 2023. Breaking up Cook’s target compensation for the year, we find that his base salary ($3 million) and annual cash incentive ($6 million) remain unchanged for 2023. His equity award value is the one that got hit – it dropped from $75 million in 2022 to $40 million in 2023.
According to the annual proxy statement released by Apple for its investors, the pay cut comes on the back of feedback (criticism, to be more accurate) from shareholders, along with the iPhone maker’s “exceptional performance” and a recommendation from Cook himself. In the end, Cook’s actual total compensation for the year could fluctuate, based on how Apple performs in the stock markets.
“Taking into consideration Apple’s comparative size, scope, and performance, the Compensation Committee also intends to position Mr. Cook’s annual target compensation between the 80th and 90th percentiles relative to our primary peer group for future years,” Apple’s compensation committee said on the matter.
They added that they had made the change to Cook’s target compensation for the year in response to last year’s say-on-pay vote, in which 64% of shareholders approved of Cook’s compensation (down from nearly 95% in 2021). Apple said 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.”