Apple's Cook's payday: Why every cent is deserved

Apple's Cook's payday: Why every cent is deserved

Summary: While Steve Jobs earned only $1 a year in salary, his fortune came from Apple stock. But Tim Cook has a million-times greater salary, but it's worth every cent.

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TOPICS: Legal, Apple
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Apple's chief executive Tim Cook was awarded a pay package worth $378 million after only officially being in the job since August. But since the late Steve Jobs' medical leave, Cook has effectively been running Apple for all of last year.

His compensation package, according to a proxy statement filed with the U.S. Securities and Exchange Commission [PDF], includes $900,000 in base salary. He also received 1 million restricted stock units from the board worth $376 million, to signal its continued confidence in running the company. This in line with the 10-year vesting period gives Cook an incentive to stay with the company.

Apple's compensation committee also increased Cook's base salary to $1.4 million.

Compared to Jobs' salary of $1 per year, the board must really be pleased with his performance.

Compared to Microsoft's Steve Ballmer at $682,000 in 2011, Oracle's Larry Ellison at Jobs-like $1 a year (not including bonuses and stock awards), it puts Cook on the very high end of the salary spectrum.

But as Fortune notes, Cook's 2011 salary is just over $900,000, along with 401(K) contributions and life insurance premiums.

It's likely that Cook is one of, if not the highest paid chief executive in the consumer technology circuit. But altogether it still doesn't come close to Cook's overall pay package in 2011, analysts believe.

Since Cook's ascension to the Apple throne, Cook has not only kept Apple in ship-shape, but its management in line -- and in their respective seats.

The culture shift from when a company chief leaves or passes can change the entire company's ethos. Cook's continued balanced approach has kept Apple vastly in the same position it was a year ago, if not a little richer.

But in respect to Jobs' "thermonuclear war" on Android and its alleged infringed patents, there was hope that Cook would relieve the company of the ongoing patent dispute cases.

New analysis received by Fortune suggests four outcomes to the global patent war:

  1. settlement with per unit license fee paid to Apple;
  2. a more favorable outcome where Apple handicaps Android's feature set and/or distribution and captures 25 percent of Android's future market share;
  3. neutral with no winner; and
  4. Apple loses and must pay a counter claim

Ultimately there are two choices: either Apple settles, or it doesn't.

If it settles, Apple's shares could jump to around $35 per share, or not and raise its share price to an estimated $260. Both have other factors to consider, such as the licensing of Apple technology for $10 per Android device sold.

Apple is "unlikely to settle cheaply" says the report. FOSS Patents author Florian Mueller agrees, but not without a catch.

"There is no realistic scenario -- not even a remotely realistic one -- in which Apple can simply tax the Android ecosystem, generating additional income but also keeping market prices and its own margins higher by (in the analyst's example) $10 per device, without losing out on the bottom line."

Cook has taken on Jobs' will in not only as Apple's top brass, but his inherited war on Google's Android also. The company will continue to plug vast amounts of money into a cause it may not win so that ultimately it does win.

Nevertheless, Apple is going from strength to strength. The Wall Street Journal reports that not only has Cook "got rid of the parsimony that existed at Apple under his previous boss", Cook also retains his vast list of senior vice-presidents.

Not to mention, Apple's stock is trading significantly higher since the share price drop upon Jobs' death on October 5th. The iPhone 4S was the most successful launch the company has ever had, and this year prepares for the iPad 3 and the iPhone 5.

Considering that Cook's compensation relies on the company doing well, it's at least one incentive for the Apple chief executive to continue the company trading at record highs.

Image source: CNET.

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Topics: Legal, Apple

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22 comments
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  • RE: Jobs' $1 a year, Cook's $1.4 million: Why every cent is deserved

    Oh, totally justified. Anyone who trims off the fat of American workers the way that apple has, should compensate their CEOs with at least a little of the resulting profits. It takes a lot of brains and guts to figure out how to Maximize profits through cheap labor.
    I mean these are CEOs of companies with just as many rights as people. They have every right to exploit the resources and people of poorer nations for their own profit. They arn't shackled by the burden of national citizenhood; those limitations are for us mere mortals to live under.
    Do you know how much red tape it takes for one of us to leave the country and work somewhere else? Let's just say that jobs have more freedom to leave the country than us mere humans.
    So, bravo, CEOs, soldier on and find new markets for your wares. Or better yet, send the president to do that courageous work; you're far too busy and important trying to figure out how to keep your company alive without a citizenry able to buy your products anymore.
    Sasori7
    • Because, of course, you NEVER look for the cheapest company

      when you hire someone to do your lawn or paint your house...
      baggins_z
      • I don't, as I found that the cheaper the cost

        @baggins_z
        the cheaper the result.
        William Farrel
    • RE: Jobs' $1 a year, Cook's $1.4 million: Why every cent is deserved

      Jobs was over paid. And Cook is as well.
      rparker009
      • RE: Jobs' $1 a year, Cook's $1.4 million: Why every cent is deserved

        @rparker009 and you???re overpaid as well. At least Cook has a plan, where as Monkey-boy does not have a clue as to what the consumers want. If he did, Windows 8 and that horrid metro UI would have been Kinned long ago.
        Rick_Kl
      • wow, Ricky. A totally non-MS, all Apple story

        @Rick_Kl
        and yet again you bring in MS to somehow try and deflect critisism of Apple to MS instead.

        Just more proof of how scared you are of MS/Windows 8 taking precious sales away from Apple.

        LOL! Too funny.
        William Farrel
    • RE: Jobs' $1 a year, Cook's $1.4 million: Why every cent is deserved

      @Sasori7

      True...these guys shouldn't be cheered on like they just won a war or saved a million lives!
      Rob.sharp
  • BS (the system won't let me type what I really want to say)

    This is just another example of the kind of corporate greed that has put America into the trouble it is in. It used to be "captain's of industry" took pride in building, not just for themselves, but for the country. The challenge and excitement for them was in creating something. Doing business was the highest stakes game in town. Now it's nothing more than greed. Jobs was one of the former. The $1 salary showed his faith in the company and in what he was doing. Today's CEO is only worried about the termination payout. It's just sickening.
    happyharry_z
    • Please stop with the greed crap already.

      @happyharry_z: No one is forcing you to buy their products.
      ye
      • RE: Jobs' $1 a year, Cook's $1.4 million: Why every cent is deserved

        @ye

        So, basically, don't buy any American goods is what you are saying?

        CEO pay in the US is completely out of line with their actual value-add and indicates that executives have gotten the power to effectively fleece shareholders of the company.

        It's a problem that has become so endemic that voting with your dollar is no longer possible.
        SlithyTove
    • RE: Jobs' $1 a year, Cook's $1.4 million: Why every cent is deserved

      @happyharry_z Well, why dont you start a trend and start working for just $1 per year? if you say yes, then i think you might be having some shares too...
      pradhanavs@...
      • I did

        @pradhanavs@... I owned the company privately. No salary. No shares. Just the payoff when it all worked.
        happyharry_z
    • Because, of course, it's totally altruistic for you to try and pay

      as little as possible for what you buy, or get as much as possible for the work you do.
      baggins_z
    • RE: Jobs' $1 a year, Cook's $1.4 million: Why every cent is deserved

      @happyharry_z
      We all are "greedy". Say you make $75K at your job - you might as well be tim cook though the eyes of much of the third world. I *want* the CEO to be paid high, which should encourage the best and a more likely success, resulting in ME keeping my job and getting higher pay. People can choose not to work at a company if they feel the executives get paid too much. The problem is "greed" at the expense of others - i.e. criminal behavior, when the actions of a few wall street crooks results in value bubbles and as seen recently the practical collapse of the whole world economy, and the loss of people's retirement funds, homes and jobs. At the other end of the spectrum when liberals with "good intentions", like barney frank, forced banks lend to people who shouldn't get loans. This is how we got in to trouble. Not because Tim Cook gets 1mil. A perfectly fine salary in that position. (Disclamer: i hate apple [and microsoft more so] )
      deathjazz
  • The stupidest 1%

    Envy is an ugly thing, especially when coupled with a willingness to pay people who throw footballs more money than people who run huge companies.
    Robert Hahn
    • 50 years' indoctrination on the evils of business and capitalism

      will do that to a people.
      baggins_z
    • RE: Jobs' $1 a year, Cook's $1.4 million: Why every cent is deserved

      @Robert Hahn Amen to that. Consumers throw tons of money at crappy music, movies, and grown ups running around like kids. The one redeeming factor is entertainment creates jobs, sports and above all technology. Apple works hard and is a global economic influncencer. My guess is Cook has some plans on how to use his money to add something to that in the future. I don't think it's all about greed.
      Mosblest
      • Smart as a rock

        Well, the stupidest 1% has no intuitive grasp of how money works. They imagine that someone who makes $1 million per year spends it on hot dogs and sauerkraut, which they consume in an orgy of gluttony, while the money that they spent disappears... instead of going to the hot dog vendors, the hot dog makers, the bun bakers, etc.

        This is why they are the stupidest 1%.
        Robert Hahn
  • CEOs take $1 salaries because it's cheaper.

    Instead of the huge salary that is taxable at the U.S. rate of 35%, CEOs take $1 salaries and then receive stock options. All they have to do is hold onto the stock options for <b>one year</b> and then they can cash them in and pay the Capital gains rate of 17%, saving them almost 20% in personal income taxes. On $50 million paycheck, that's saving almost 10 million dollars.

    And people wonder why we can't pay our bills as a country when the execs are weaseling out of paying their taxes.

    It's only gravy for them that the $1 salary makes them look good to the Sheeple public too.
    Zorched
    • Steve Jobs didn't get stock options since 2003

      @Zorched

      SJobs had a one buck a year salary AND..
      No stock options since 2003. (some of his options came due after that date but he wasn't issued any more since 2003)
      Jobs also didn't sell a single share of apple stock since his return to Apple except some for tax purposes.

      so how does your "the $1 salary makes them look good to the Sheeple public too." apply to Jobs or Apple?
      Davewrite