January 02, 2013, 9:29 AM — Apple raised CEO Tim Cook's salary by 55% for 2012 and awarded him a $2.8 million bonus, but said the chief executive's pay was still "significantly below the median" of comparable firms.
"Mr. Cook remains significantly below the median annual cash compensation level for CEOs at peer companies," Apple said in a preliminary proxy statement filed with the U.S. Securities and Exchange Commission (SEC) last week.
"Companies use the proxy to communicate with shareholders," said Don Lindner, the executive compensation practice leader at WorldatWork, an association of human resources professionals. "By saying Cook's pay is below the median, that gets a big positive from the shareholders."
But even taking into account Apple's size and its high-revenue year, Cook's compensation was certainly adequate, Lindner argued. "The single biggest factor in executive pay is the size of company, and Apple obviously is huge," Lindner said. "But Cook has not been in the job very long. It may take a period of years for him to be paid at the median."
He called that thinking typical of compensation committees and corporate boards.
Although Cook, 52, has been with Apple since 1998, he only assumed the CEO role in August 2011, just weeks before co-founder and former CEO Steve Jobs died of pancreatic cancer.
Another compensation expert saw Apple's boast of low CEO pay differently. "That's not something companies typically brag about, but it's part of the culture of Apple, that you work for the long-term benefit of the company," said Bob Buford, a Portland, Ore.-based compensation consultant.
Cook's compensation was drastically lower than the year before: His 2012 package was down 99% from 2011's.
That year's total was skewed by a massive retention grant of 1 million Apple shares. At the time, those shares were worth $376 million, the bulk of his $378 million total.
As of Monday's market close, the 1 million shares were worth over $532 million.
Because the shares, officially dubbed "restrictive stock units" (RSUs), vest in equal parts in 2016 and 2021 -- and then, only if Cook is still with the firm -- they're intended to keep him at Apple.
Cook's pay package was considerably less than four of his subordinates, who received large stock awards worth between $66.2 million and $83.1 million. Cook didn't receive stock for 2012 because of the large award he was granted when he was promoted to CEO.
"There was no competitive reason for [awarding stock this year]," said Buford. "They're already married to the guy for 10 years."