In an unprecedented move, Apple announced that CEO Tim Cook will take a more than 40% pay cut this year, as the tech sector continues to grapple with economic headwinds.
The pay cut diminishes what Cook earned the previous year, reflecting the adjustment on how Apple calculates compensation. The company said Cook approved the new pay.
Under the pay cut, Cook’s target total compensation is $49 million for 2023, with a $3 million salary, $6 million cash incentive and $40 million in equity awards, Apple said in a regulatory filing on Thursday.
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Apple’s calculation adjustment comes at a time when the tech industry has been severely hit by economic downturn, forcing a growing number of companies to cut workforce.
AP News reported that Apple had in March conducted an advisory shareholder vote on executive pay with 6.21 billion shares voting in favor of the executive pay package and 3.44 billion against. The report also noted that there were also abstentions and broker non-votes.
That happened while Apple was still the most valuable company in the world, a position it lost to Saudi Aramco about two months later.
The Cupertino, California giant said its compensation committee took into account shareholder feedback, the company’s performance and a recommendation from Cook, who was promoted to CEO in 2011, to adjust his compensation in light of the feedback received, per AP News.
It is not clear if the adjustment affects other Apple executives. But the company said it consulted with shareholders before the compensation decision was made and received “overwhelming support for Mr. Cook’s exceptional leadership and the unprecedented value he has delivered for shareholders.”
“Those shareholders we spoke with that did not support our 2022 Say on Pay proposal 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,” the company said.
While Cook’s base salary has been $3 million for the past three years, his total compensation, including the restricted awards, saw a leap from $14.8 million in 2020 to $98.7 million in 2021 and $99.4 million in 2022, according to AP.
Though the iPhonemaker has not reduced its headcount like other tech companies after firing about 100 contract employees responsible for hiring worldwide in August – and freezing hiring in November – its stock declined about 23% in the past year.
The adjustment underscores Apple’s efforts to cut costs since last year. The company plans to position Cook’s annual target compensation between the 80th and 90th percentiles relative to its primary peer group for future years, according to the filing.
Apple’s CEO Tim Cook has taken a “rare” pay cut of around 40%, in order to take his total compensation package to $49 million this year. Cook made $99.4 million in total last year, including $3 million as a base salary, about $83 million in stock awards and a bonus, according to Bloomberg. While this year’s cut included some pushback from shareholders, it was also on the recommendation of Cook himself to drop his remuneration. As part of the deal, however, the percentage of stock paid to Cook tied to Apple’s performance has increased to 75% from 50%. In a filing, Apple said it plans to make Cook’s paycheck around the 80th and 90th percentiles relative to the primary peer group in future.(LinkedIn News)