Apple Awards Tim Cook 1,000,000 Shares of Stock as CEO Bonus to Stay Until 2021

http://www.macrumors.com/2011/08/26/apple-awards-tim-cook-1000000-shares-of-stock-as-ceo-bonus/

by sahillavingia • 15 years ago

107 107 15 years ago

Bud• 15 years ago

Add this amount ($380 million or so at current Apple stock price) to the extrapolated salary for Cook over the next decade, and he will earn right around an even billion dollars in the next 10 years.

Nice work, if you can get it!

Game_Ender• 15 years ago

Not sure he will be getting this every year. The first 50% vests in 5 years and the next 50% vests 5 years after. This seems like a large deferred bonus to encourage Cook to maintain or increase the stock price for the long term.

mikehotel• 15 years ago

I read that as the 380 million in 10 years deferred CEO bonus, in addition to his current 60 million/year total compensation, would total to around 1 billion at the end of 10 years. I'm going to go out on a limb and guess it will be well north of 1 billion, once stock price appreciation is accounted for. Hope he considers taking the http://givingpledge.org/ :)

jmreid• 15 years ago

RSUs are fairly standard as a bonus inside Apple (not this many though!). Typically, they vest over four years, twice a year as long as you stay an Apple employee.

dstein• 15 years ago

I'd like to apply for this position. Are they still accepting resumes or is it too late?

jrockway• 15 years ago

Wow, 58 million dollars a year. What's the incentive to work for more than one year?

58 million dollars is more than I'll ever make in my entire life.

ugh5• 15 years ago

Leading one of the most exciting tech companies on the planet is the incentive.

But I really do wonder how much additional incentive all that money can offer. At a certain point it gets impossible to spend any of the additional money.

blantonl2• 15 years ago

Don't discount philanthropy and how that factors in to someone's sense of gratification.

Take Bill Gates for example. He has accumulated far more money then he could ever spend on himself, so he went a different route and pledged to give much of his fortune away to causes he feels are worthy to give to. Remember, the process of Bill Gates giving away his money has spawned an entire business around that process:

http://www.gatesfoundation.org/Pages/home.aspx

tjogin• 15 years ago

I guess it's one way of taking money out of the equation, assuring that he'll stay or leave for other reasons. If $58M wasn't enough already.

philwelch• 15 years ago

Normal people would just take 58 million dollars for the first year and retire. Then again, normal people don't earn 58 million dollars a year.

aneth• 15 years ago

Anyone worth $58M is doing it for more than the money. Jobs most certainly wouldn't have hand picked a successor who would choose retirement over running Apple.

mrpollo• 15 years ago

$58 p/y Assuming the stock prices will remain the same, http://www.google.com/finance?client=ob&q=NASDAQ:AAPL

darksaga• 15 years ago

It was Inevitable the stock would dip a little when Jobs announced he was stepping down. Considering he's still going to be the driving the force of the company as chairman of the board pretty much tells you all you need to know.

Secondly, he wouldn't hand pick someone who didn't share his vision. Cook is smart, he's not going to drastically change the course of the company like some other cough HP cough companies have done.

Considering these two things, I'd say the stock prices will stay the same if not continue to increase in value.

sahillavingia• 15 years ago

There's a five year cliff.

bitanarch2• 15 years ago

The GDP of the USA is $14.12 trillion dollars. If you're truly the kind of people who seek to move the world forward, 58 million dollars is nothing.

ugh5• 15 years ago

If your idea for changing the world includes buying all the products and services the US economy produces in one year $58m is certainly not enough. I’m just not sure what kind of plan for changing the world that is.

Money is certainly handy when your plan is to change the world but it’s far from the only thing you need and probably not even the most important one. An idea and a plan seems quite important, for example. Just throwing money at a problem will seldom get you very far. Also, even a few billion won’t save you when some super power declares you a criminal, takes away all your money and throws you into prison or executes you.

vacri3• 15 years ago

If you want to retire and live a 'middle-class' life, sure.

But what if you want to buy and run a sports team?

Or foster special technical projects under your own steam?

Or back a charitable foundation for the progress of -foo-?

Or build a mansion with a long heated driveway... and be able to run it?

ugh5• 15 years ago

A million or more per year is middle class now?

djcapelis• 15 years ago

The more important the person, the bigger the golden handcuffs need to be.

ck2• 15 years ago

He can live off the dividends after that and only pay 15% taxes too.

gnok• 15 years ago

Sort of hard to do, if your stock doesn't actually pay any dividend.

blantonl2• 15 years ago

many Apple shareholders would agree wholeheartedly with this statement.

With that said, all that cash they are sitting on is really interesting, considering they've been hoarding it for a while. Jobs was criticized for this in the financial arena, but his position always referred back to the days when Apple almost went down the drain. That has made them ultra-conservative from a financial perspective.

phillco• 15 years ago

Yes, but now he has an incentive to fix that problem :)

chollida1• 15 years ago

What dividends? Apple doesn't yet pay out one, though it's possible that'd eh Luke sometime in the future.

daimyoyo• 15 years ago

I'm not sure it bodes well for Apple that the board feels like it has to incentivize Tim Cook with golden handcuffs. They gave Steve a lot in terms of stocks and gifts(like the free plane for example) but I can't ever rememberer him getting restricted stock to remain with Apple(except perhaps when he first came back and the company was on the verge of insolvency). Just having the ability to lead Apple always seemed like incentive enough for him.

mrkurt• 15 years ago

They probably feel the need to demonstrate the incentives to the investors, not the guy who's been at Apple for the last 13 years.

sneak2• 15 years ago

Tim Cook is an employee, not a founder. Say what you will about cash, there is always a difference.

mynegation2• 15 years ago

I somewhere read that Tim Cook's salary was 800K and though - wow that's really not that much for a COO (and CEO-to-be) of the biggest corporation (by market cap) in the world. But then I found that total comp is more like 60M (http://people.forbes.com/profile/timothy-d-cook/6607) which looks more like I though it should be.

My point being, in 2010 Tim Cook already got 52M of restricted stock awards, so this number spread out through the years is nothing out of ordinary for him.

kingkawn2• 15 years ago

"which looks more like I though it should be."

Did you mean should? Or would?

benatkin• 15 years ago

Why shouldn't it be should? He's done an amazing job and deserves to be compensated fairly. At the scale Apple's at, the number will be huge to most.

jbrennan• 15 years ago

I wonder if he too will adopt the $1/year salary Jobs was known for?

veyron• 15 years ago

If Tim Cook and Apple without Steve Jobs can continue innovating at the same pace, shareholders will see it as a small investment in Apple's future. And it seems like this was geared to appease the markets.

jellicle2• 15 years ago

Is Tim Cook really worth as much as 580 regular Apple employees? Really?

Tim Cook alone is taking home 5% of all the money Apple spends on employee compensation worldwide. If you cut down Cook's compensation a little bit, everyone else at Apple could get a couple percent raise.

Which one would REALLY be better for the company: paying every single Apple employee a couple percent more enabling Apple to hire better people across the board, or paying it all to the CEO?

People need to recognize how grotesque it is that you have a CEO making $160,000 per day, every day.

bobthebee• 15 years ago

Ask the shareholders. And since I am one I'll answer.

I don't have a problem with this at all. $300M is about 1/1000 of the current market cap. The rewards are spread over 10 years. So 1/10000 per year to have a world class CEO running the company. Would I pay that? Gladly.

jbooth3• 15 years ago

Give me a break, you don't think you could've gotten him cheaper?

What's the difference between 580 million and, say, 200 million? It's funny money either way, and the person's quality of work is going to depend on other motivations.

dan_manges• 15 years ago

I agree. I think pg's equity equation[1] is applicable here. If Tim Cook keeps Apple on the trajectory it's on now, Apple's shareholders will get a great return on this investment.

[1] http://www.paulgraham.com/equity.html

rhygar• 15 years ago

This is a symbolic vote of confidence between Tim Cook and Apple more than anything. When you consider the effect on the stock price if there was any uncertainty about the future leadership of the company, this is a bargain.

Besides, that is not his salary or anything. Who knows, he might follow in the tradition of Steve Jobs and take a $1 salary.

Steko2• 15 years ago

"If you cut down Cook's compensation a little bit, everyone else at Apple could get a couple percent raise."

Or they could use the money they have and give everyone including Cook huge raises. Or cut everyone's pay and make their stuff cheaper. Or pay their suppliers 20% more. Or put a huge check in some charity basket. Statements like these are pointless.

I'll suggest that it's very likely that Tim Cook would have never come to work at Apple if they paid executives 40-60% less then they do as you suggest. And that would have been a net loss for Apple.

timsally• 15 years ago

Apple is the most valuable company in the world. Why do you find it surprising that it takes hundreds of millions of dollars to retain someone qualified to run such a company? Plus, the position of CEO is arguable the place where Apple is the weakest and companies spend to shore up their weaknesses. In contrast, they don't need to bump pay by 5% to get the best engineers and designers. It's a good use of the money that Apple has and it is amortized over a a decade.

CamperBob• 15 years ago

Is Tim Cook really worth as much as 580 regular Apple employees? Really?

Steve Jobs sure as hell was. And Tim's job has been to execute Jobs' vision.

People need to recognize how grotesque it is that you have a CEO making $160,000 per day, every day.

Take it to Reddit.

acidblue• 15 years ago

Best. Response. Ever.

spitfire2• 15 years ago

If you think you're worth that extra money, why don't you try asking for it?

aaronbrethorst2• 15 years ago

> People need to recognize how grotesque it is that you have a CEO making $160,000 per day, every day.

People need to recognize how grotesque it is that you have a CEO barely being taxed on their income compared to what they would've been taxed during the greatest economic boom of the past twenty years.

I'm an AAPL shareholder, and I support the board's largesse. Pay him more for all I care, as long as he delivers and my stock appreciates. I would love it if the US government would, relative to the current situation, tax the shit out of me and Tim, both.

> enabling Apple to hire better people across the board

I'll make an assertion of my own: I don't think this is true for a second.

egiva2• 15 years ago

Totally agree. I'm guessing that those options are spread over the 10 years, so we're talking roughly $37m a year if the stock remains at the same price. It's just paper money until those options become liquid, and he's working at a big discount when compared to Jobs' 5.5+ million shares from 1997 until today (14 years).

So yeah, taking into consideration that Apple is suddenly working with a CEO that arguably requires less compensation than Jobs, my issue isn't with the amount, but rather how he's taxed and more broadly, the large divide between the top income tax bracket (35%+) and capital gains (15%) which is really terrible, considering that it consitutes an enormous tax loophole for people who earn their income via investments, rather than a traditional wage.

sunchild4• 15 years ago

Exactly. Apple seems to have no problem whatsoever hiring the best and brightest. In fact, I'd say it's what they do best, which is saying a lot.

jellicle2• 15 years ago

So which is it: either Apple needs to pay people a shit-ton of money to come work for them, or they don't.

Most of the commenters in this thread feel, as you do, that CEOs need to be paid a shit-ton of money, or else they would never work for Apple, but the rank-and-file do not need to be paid a lot of money, because Apple is such a great company to work for. Can you explain the discontinuity? Why is Apple great to work for as a peon, but terrible to work for as a CEO? Why does extra money paid to a CEO definitely and absolutely result in a better CEO, but extra money paid for employees won't get them better employees?

Keep in mind the studies that show highly paid CEOs underperform low-paid ones when you answer.

RockyMcNuts• 15 years ago

It's the principal-agent problem - http://en.wikipedia.org/wiki/Principal-agent_problem

You could find a lot of capable people willing to do the job for a lot less.

But if you pay them a fixed salary, even $1m, that isn't directly linked to the performance you're looking for, then the game is to avoid anything too risky, even if the expected value is very high, if it might endanger the CEO's job. The game would be to take the minimum risk and do well enough to not get fired, and that's it.

If Tim Cook manages to double the stock price, he'll have $700m. If it drops to $100, he'll have $100m. It's a big difference, and his interests and risks are aligned with the shareholders.

Anyway, that's the theory. Give too much stock, and you're impoverishing the shareholders for little benefit. Don't give enough, and a superstar might decide he'd rather do a startup or an incubator LOL, or he may not want to pursue the same kind of risk-reward as the people who hire him.

$100m is still a great deal of money. I guess going to $700m, it's the difference between superrich for life, and a legacy of being a great leader and dynastic wealth LOL. Nice work if you can get it.

cabalamat2• 15 years ago

> If Tim Cook manages to double the stock price, he'll have $700m. If it drops to $100, he'll have $100m. It's a big difference

Is it? I would imagine the lifestyle one could afford with $100M is identical to that with $700M.

spitfire2• 15 years ago

You can't afford a decent jet, a yacht and houses on $100M. On $700M you can.

small jets start in the single digit millions. Decent jets (10+ people) are $50M easily, costing $1M+ a year. yachts can get extreme. Add in a few homes throughout the world and you've burnt through that $100M easily. Think of it as comparing a toyota to a bentley.

6ren2• 15 years ago

BTW: If Tim Cook can show that Apple can succeed without Steve Jobs (e.g. by launching something amazing in the next couple months), the stock could easily double, because it has been discounted by the predicted effect of Jobs leaving.

2muchcoffeeman• 15 years ago

Good thing Steve stepped down just before the fall line up! Genius move.

kahawe• 15 years ago

I am no knowledgeable stock analyst, I'm not in that industry at all and I believe you could just as well pick stocks by flipping a coin or letting a parrot pick. And I am in no position to give and stock advice at all and you should just skip this and definitely not listen to it.

That being said, personally for me I do not see AAPL going anywhere but UP in the long run for the simple reason that I take my colleagues and friends for my "guesses" rather than "technical" analysis or nervous traders dropping shares when Mr Jobs says "boo!!". Those peers and subjective impressions were good enough so far when all of a sudden everyone wanted an iPod back in the day before iPhones and sure enough suddenly Apple got all successful and continued to grow.

Now I see the same situation with the iPhone and iPad - I see people here who never heard of Apple some 5 or 10 years ago going crazy over those products and they cross-buy into the Minis and Airs and iMacs and all those other products.

I do understand very well that the stock market is completely unpredictable and very random and good sales numbers can mean nothing but... my bottom line is: all those non-techs and former PC+Windows users jumping on the "ohmygod apple is so awesome!" train for some time now and everybody loves Apple here and they have built an excellent company and generally have a very good and positive public image as an innovator and they do not stop to amaze people with little awesome details and continue to do so in their Apple stores and on top of that I am convinced that they single-handedly CREATED the iPhone-smartphone market and tablet/iPad market[1] and I don't see that changing any time soon. And now with the "Mr Jobs" uncertainty out of the way and his very DNA and spirit woven so closely with that company on ALL levels and him still being on the board, I am not worried the slightest bit and just regret I don't have more money to invest right now.

[1] I realize there were smartphones long time before the iphone and I know there were kinda tablet-thingies before but in my book, Apple created products that simply did not exist before and oh boy did they get it RIGHT and thereby they created two completely new markets and now the masses are buying into it like crazy - none of this existed before. Those are Apple markets and you can see how similar any competitors' products are to Apple's products, no matter how good or bad those "clones" might be. Apple created those markets and they have displayed an excellent and sell-able understanding of both.

eneveu3• 15 years ago

What does "LOL" mean in this context?

I've googled it, but it's hard to find the appropriate meaning, since search results seem to focus on the "laughing out loud" sense... "Limit of Liability" was the closest meaning I could find on the Wikipedia disambiguation page ( http://en.wikipedia.org/wiki/LOL_(disambiguation) ), but it doesn't seem to fit in this context.

sneak2• 15 years ago

Best translation I can think of: "ha ha only serious"

He is using it as the word that the Laughing Out Loud initialism became, which has slightly different usage and meaning. (e.g. in the common phrase "I did it for the lulz.")

jedberg• 15 years ago

I think it means Laugh out Loud in this context.

jmspring• 15 years ago

I'm sorry, but the comments on here stating "$58m is more than enough to retire upon" are naive when talking about the CEO of one of the largest (market cap) corporations in the world.

Is it a lot overall? Yes. Is it comparable to the same position in similar companies? Probably, I haven't done the comparison. I know a lot of banking CEOs have been making much more for nearly wrecking the economy.

I generally think the C-class officers to average employee salary is way out of whack. But, I think, given the job Tim Cook has been doing and the contribution to the valley and economy that has resulted due to Apple's success, I feel is is more than merited this generous plan.

If Apple were bleeding or just average? That would be one thing, they have been running on all cylinders and Tim Cook has been instrumental in that.

Jayasimhan• 15 years ago

"In contrast, Steve Jobs earned a $1 annual salary every year since he rejoined Apple in 1997. While many $1-a-year CEOs reap big back-end stock and options packages, Jobs was almost a financial ascetic: He collected no stock awards most years, no cash bonuses and no perks, even turning down a 401(k) match from Apple."

From http://money.cnn.com/2011/08/26/technology/tim_cook_stock_bo...

justincormack• 15 years ago

Apart from the 10 million share options he got that the article mentions...

URSpider94• 15 years ago

Folks seem to be mentally linking this news to Warren Buffett's comments about income tax disparity. Keep in mind that RSU's are taxed as earned income, valued on the day that they vest. Any appreciation above and beyond that would indeed be taxed at capital gains rates (15% if held longer than a year after vesting), but the core value will be taxed at his marginal rate of 35%.

Buffett's tax rate hovers around 15%, because the lion's share of his income comes from cap gains and qualified dividends. Cook will be paying more than double that on his income from this deal.

jonknee• 15 years ago

If the shares don't change in value, that will be an approximately $67M tax bill (vs $28M if it were taxed at 15%). A good problem to have I suppose.

Apple Awards Tim Cook 1,000,000 Shares of Stock as CEO Bonus to Stay Until 2021

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