Apple is reducing CEO Tim Cook’s pay by more than 40% to US$49 million in 2023, citing investor guidance and a request from Cook himself to adjust his pay. As part of the changes, the percentage of stock units awarded to Cook and linked to Apple’s performance will increase to 75% in 2023 from 50% now and in future years, according to the company in a regulatory filing on Thursday.
Cook received US$99.4 million in compensation for 2022, which included US$3 million in base salary, approximately US$83 million in stock awards, and a bonus. This was an increase from his total pay package of US$98.7 million in 2021.
Cook’s latest pay was based on “balanced shareholder feedback, Apple’s exceptional performance and a recommendation from Mr Cook”, the iPhone maker said in the filing. The company also plans to “position Mr Cook’s annual target compensation between the 80th and 90th per centiles relative to our primary peer group for future years,” Apple said.
Apple has received criticism from groups such as Institutional Shareholder Services for Cook’s previous compensation package, but it was approved by a majority of shareholders last year.
ISS, a leading advisory firm, expressed concern that Cook’s stock would continue to vest after his retirement and that half of the rewards were not based on performance criteria such as the company’s share price.
The target compensation of US$49 million includes the same US$3 million salary and US$6 million bonus as in 2022, as well as a US$40 million equity award. In 2022, his equity award was worth $75 million. Cook’s actual total compensation for 2023 may vary depending on the performance of the company’s stock.
It is unusual for CEOs to recommend that their own pay be reduced. According to Bloomberg data, executive pay packages have become increasingly lavish, and 2021 was a record year for executive compensation.
However, shareholders are increasingly opposing such packages. According to Mercer, a record number of so-called say-on-pay votes failed in 2021, which may have reflected shareholders’ dissatisfaction with how companies performed during the pandemic.
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