Apple’s CEO Gives up Performance Bonus
Tim Cook, the Chief Executive Officer of Apple Inc. took home roughly the same salary that he had earned in 2012, but he lost part of his stock award that was based on performance in a year that has been dominated by intense competition and rising margin pressure, which eventually ended up bludgeoning the stock of the iPhone maker. Cook was given a base salary of $1.4 million and was also awarded a bonus of $2.8 million dollars, making his total salary about $4.25 million. This was roughly on par with last year, according to a preliminary proxy statement made by the company on Friday.
However, the annual performance-dependent award that is based on the shareholder returns from August 24th 2012 to August 25th 2013, which comprised of 7,100 shares was given up by Mr. Cook. Over this one year period, the stock of the company had lost about one quarter of its total value. Shareholders were also advised by the company to vote down a resolution that had been made by Carl Icahn, an activist investor, who had proposed that the iPhone maker purchase its shares back in fiscal 2014 of a total value of $50 billion. It was the first time that any response had been voiced by the company related to Icahn’s demands.
It was argued by Apple Inc. on Friday that it had already made share repurchases and paid dividends worth $43 billion in the first six months of its capital return program, which is roughly valued at $100 billion. When the company was advising shareholders to reject the proposal of Icahn, it said that flexibility, access to resources and unprecedented investment is needed to keep the company active in the dynamic and competitive landscape. Icahn has been renowned for decades because of his strong-arm tactics such as proxy fights and has made it clear repeatedly that his proposal isn’t an indication of his dissatisfaction with Apple’s management.
The issue has been discussed by the billionaire with Cook in the past few months and they have argued via Tweets that the company can easily prop up its stock with a buyback of $150 billion. Since Tim Cook took over the company after Steve Jobs, he has been steering the company in a more investor-friendly direction due to which he established one of the biggest capital investment return programs of the industry. In 2012, Apple’s board had granted Cook an award of about one million restricted stock units, which had been one of the largest pay packages to be given to an executive.
This had been given to signal the confidence of the company in Tim Cook, who had stepped up in the wake of Steve Jobs. The award is vested annually, but a part of it is dependent on the shareholder returns against a group of Apple’s peers such as Google Inc. and Cisco Systems Inc. The company has been under considerable pressure as companies launch new phones and tablets based on Google’s Android OS, but on the plus side the company has finally secured a deal with China Mobile.