Apple’s Tim Cook Takes 99 Percent Pay Cut: Is this really correct?

The CEO who has been at the helm of the Cupertino-based company since founder Steve Jobs died in Oct. 2011, saw his compensation decline because he got no stock award this year. However, he did get a 51 percent increase in salary and bonus.
 
According to documents filed to the Securities Exchange Commission Thursday, Cook earned a salary of $1.36 million and received a cash bonus of $2.8 million, making his compensation for the year $4.2 million.

 
Compensation for Cook is down after the CEO was awarded one of the highest compensation packages on record in the prior year.  In 2011, Cook received $376.2 million in stock, which boosted his pay package to $378 million. According to the Associated Press, that stock owned by Cook is now worth $510 million. Under the terms of the stock grant, half the shares will vest in 2016 and the rest in 2021 if he stays with the company.


However, a careful analysis of the figures released by the company shows that he actually got a salary increase. According to Graeme McMillan of Didital Trends, "Despite the lower compensation however, the current CEO of the trendsetting tech — and increasingly lifestyle — company has actually been given a pay raise for the year. Confused?".

Continuing, McMillan said, "In 2011, $376.2 million of Cook’s pay came from the various stock awards Apple issues every two years. The loss of the awards disguises the fact that Cook’s base salary actually increased this year, with Apple’s regulatory financial filing on Thursday revealing that he received $1.4 million for 2012, up from $900,000 in 2011. The $4.2 million figure is reached when that base salary figure is combined with the $2.8 million bonus he received for the year".
 
The news seems disarmingly bad for the company at first glance, but not so much so upon further investigation.


It’s been a roller coaster ride for Apple and its shares, which hit an all-time high of $705 on Sept. 21 but have since slid to $513. For the year, though, the shares are up 27 percent.
 
In July, Apple reported lower than expected third quarter revenue of $35 billion, while analysts had expected $37 billion. The company reported higher profit of $8.8 billion for the third quarter, up from $7.3 billion the previous year.
 
Earlier this year, Cook acknowledged a misstep by the company in its panned Apple Maps, and issued an apology to its customers for the frustrations. In December, Cook told Bloomberg Businessweek about plans to manufacture Mac computers in the United States.
 
“Next year we are going to bring some production to the U.S. on the Mac. We’ve been working on this for a long time, and we were getting closer to it. It will happen in 2013,” Cook said in an interview with Bloomberg Businessweek.
 
Despite the move to bring Apple to America, the company has seen its price targets slashed by some analysts who worry that the market for iPhones and iPads is becoming saturated.
 
According to the San Francisco Chronicle, “at least five analysts have cut their price targets for Apple since Dec. 16, with some saying Apple’s purchases from suppliers indicate iPhone and iPad sales may not meet projections.”