Tim Cook’s pay re-enters earth’s atmosphere

Apple CEO Tim Cook presents the new iPhone 14 at an Apple event at their headquarters in Cupertino, California, U.S. September 7, 2022. REUTERS/Carlos Barria

NEW YORK, Jan 13 (Reuters Breakingviews) - How to compensate Apple (AAPL.O) Chief Executive Tim Cook is one of the more puzzling questions for corporate governance experts. His pay has been out of this world, but then so has the iPhone maker’s share price performance. Nonetheless Apple, its investors and its board have agreed Cook’s pay should orbit closer to Earth in 2023.

The $2.1 trillion company has comfortably outperformed rivals over the past three years, with shareholder returns including reinvested dividends in the top percentile among its peers, according to Institutional Shareholder Services. Likewise, his annual compensation of $99 million in 2022 was over 4 times the median of peers, who include Amazon.com’s (AMZN.O) Andrew Jassy and AT&T’s (T.N) John Stankey.

On Friday, Apple said Cook’s targeted pay will fall to $49 million. That’s an improvement, but still generous. Apple says it will target his pay between 80th and 90th percentile among peers in future years.

A bigger improvement is making Cook’s pay less of a giveaway. In 2022, half of his award of Apple stock paid out automatically over time – so all he had to do is wait. Now it’s 75% performance-based, and his unvested time-based awards lapse if he retires. This is hardly space-age stuff, but at least Apple’s pay is no longer stuck in the past. (By Robert Cyran)

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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

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