Imagine having the kind of money that would allow you to dock yourself $4 million dollars as a slap on the wrist.
That is exactly what Tim Cook, CEO of Apple did when he learned about the company’s stock performance.
Actually it was Apple’s compensation committee that decided this past year to align its CEO’s pay with the company’s performance. If stock performance is better than the other stocks in the S&P 500 index, then the CEO, or Cook would take home more – If Apple’s stock performs worse than the index, Cook takes home less. And – if Apple performs terribly – Cook would feel it in his pay.
In a preliminary proxy statement filed on Sunday, Apple said its compensation committee didn’t want to place too heavy a burden on Cook. The committee only wanted less than half of Cook’s annual stock grants to be subject to the new performance-based metric.
But Cook wanted his stock grants at risk – he urged the committee to put 50 percent of his stocks in the hat.
Cook’s decision came from a “strong desire to set a leadership example in the area of CEO compensation and governance,” Apple said in its filing.
And, subsequently Apple shares performed pretty badly last year and Cook lost the 50 percent of his stock grants that were at risk. Apple’s stock fell 26 percent in August 2012 and August 2013 – The time period when Cooks stocks vest annually. However, the S&P 500 rose to 18 percent during that time period.
So – that 50 percent that Cook forfeited was worth nearly $4 million.
Don’t feel bad for him yet – he still took home a bundle. He made $1.4 million just in salary, with a cool $2.8 million cash bonus – and a whopping $36.4 million in stock grants.
The $4 million ended up being just 10 percent of his annual compensation. Not bad.
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