December 27, 2012
Apple (NASDAQ: AAPL ) today filed a preliminary proxy statement for the 2013 annual meeting, revealing the compensation paid to CEO Tim Cook this year.
The cash portion of Cook's pay adds up to roughly $4.2 million, including $1.4 million in base salary and a 200% cash bonus; 237,500 of his restricted Apple shares vested in March and were exchanged for $140 million in cash. These restricted shares were granted in 2008, when Cook served as Apple's chief operating officer.
Apple also added $15,000 to Cook's 401(k) plan under the company's general contribution matching program, and paid life-term insurance premiums worth $2,274. He received no stock options, no restricted shares, and no other awards of any kind. The board offered to modify Cook's restricted shares to match the newly instated dividend program, but the CEO declined.
The new compensation may seem low compared to last year's grant of 1 million restricted shares, but it's Apple's policy to reward its CEO with infrequent and long-term lump bonuses. Half of the 2011 grant vests in 2016 and the other half in 2021. There are no contracts binding Cook to the company, nor does he fall under any kind of severance plan. Cook could theoretically be fired at any time and lose all of his unvested shares.
This vesting structure is meant to give Cook incentive to stay around as well as manage the company with long-term results in mind.
It's worth noting that Cook's compensation policy doesn't stray very far from that of former CEO Steve Jobs, who took a nominal $1 salary ever after his return to Apple in 1999 and didn't accept any stock awards after 2003.