Apple’s chief executive Tim Cook has taken a 40 per cent pay cut and will receive a compensation of $49 million this year.
The pay cut was made based on investor guidance and at the request of Mr Cook, Apple said in a regulatory filing to the US Securities and Exchange Commission.
The technology company’s compensation committee maintained the cash components of Mr Cook’s 2023 compensation and reduced his target equity award grant value based on a “say on pay” advisory votes by shareholders.
“The compensation committee balanced shareholder feedback, Apple’s exceptional performance and a recommendation from Mr Cook to adjust his compensation in light of the feedback received,” the iPhone maker said in the filing.
“The committee then approved the target annual compensation of executive officers for 2023, including changes to the chief executive’s compensation, which Mr Cook supported, and that the committee believes are responsive to shareholder feedback, while continuing both to align pay with performance and to recognise Mr Cook’s outstanding leadership.”
Apple’s market value is back up to $2.12 trillion after falling below $2 trillion earlier this month.
The share price of Apple, which is still the world’s largest company by market value, has dropped about 23 per cent over the past 12 months but is up about 7 per cent since the start of this year.
The shares had been buttressed by the digital uptake across the world at the height of the Covid-19 pandemic, propelling the company’s market value to $2 trillion in August 2020.
Apple’s market value briefly surpassed $3 trillion in January 2022.
The committee said it intends to position Mr Cook’s annual target compensation between the 80th and 90th percentiles of chief executive pay at companies in Apple’s primary peer group for future years.
Shareholders cited concern over Mr Cook’s total compensation as a result of his $75 million equity award each in 2021 and 2022, and expressed preference for reduced equity award values for future grants if they will be granted annually, according to the filing.
“The majority of Mr Cook’s compensation has been delivered through long-term equity awards since his promotion to chief executive in 2011,” Apple said.
“The equity awards he has received over time align with Apple’s growth and success and the tremendous value delivered to shareholders under his leadership.”
At the end of 2022, Apple’s total shareholder return increased by about 1,212 per cent during Mr Cook’s tenure as chief executive, significantly outpacing the S&P 500, which increased by about 290 per cent over the same time period, while Apple’s market value grew, according to the filing.
The investors also called for a higher percentage of Mr Cook’s equity award to be performance-based.
Consequently, Mr Cook was granted an equity award with 75 per cent performance-based vesting and 25 per cent time-based vesting.
The percentage of his performance-based restricted stock units will be at least 75 per cent for future years, Apple said.
During consultations, shareholders also called for pro rata vesting of equity awards upon a termination of employment due to retirement.
“The time-based RSUs awarded to Mr Cook for 2023 provide for pro-rata instead of full vesting in the event of retirement during the term of the award,” the filing said.
“The compensation committee intends to maintain this same structure for future years.”
