Apple's Tim Cook was second highest paid US CEO in 2019
Apple CEO Tim Cook came in second in a ranking of the highest paid U.S. CEOs in 2019, behind only Tesla's Elon Musk.
Credit: Time
The Apple chief executive earned annual compensation totaling $133.7 million in 2019. Cook's base salary that year was $3 million, with $7.7 million in bonuses, $884,000 in perks, and the remaining $122.2 million coming from stock awards.
According to Bloomberg 2019 Pay Index, Cook ranks in second behind Tesla CEO Elon Musk in a list of the highest paid U.S. CEOs.
Musk earned $595.3 million in 2019, about four times higher than Cook. According to Bloomberg, that's primarily because of the pay deal he scored a few years before.
In third place was Tom Rutledge, CEO of Charter Communications, with annual compensation of $116.9 million. Other tech CEOs on the list include Alphabet and Google executive Sundar Pichai, with $86 million in earnings, and Microsoft CEO Satya Nadella with $76 million.
Cook is well-known for his philanthropic tendencies. In 2019, it was reported that he gave away $5 million of owned company stock to an unidentified charity. That comes several years after Cook said he would donate the majority of his wealth to charitable causes in a "systematic approach" to philanthropy.
Credit: Time
The Apple chief executive earned annual compensation totaling $133.7 million in 2019. Cook's base salary that year was $3 million, with $7.7 million in bonuses, $884,000 in perks, and the remaining $122.2 million coming from stock awards.
According to Bloomberg 2019 Pay Index, Cook ranks in second behind Tesla CEO Elon Musk in a list of the highest paid U.S. CEOs.
Musk earned $595.3 million in 2019, about four times higher than Cook. According to Bloomberg, that's primarily because of the pay deal he scored a few years before.
In third place was Tom Rutledge, CEO of Charter Communications, with annual compensation of $116.9 million. Other tech CEOs on the list include Alphabet and Google executive Sundar Pichai, with $86 million in earnings, and Microsoft CEO Satya Nadella with $76 million.
Cook is well-known for his philanthropic tendencies. In 2019, it was reported that he gave away $5 million of owned company stock to an unidentified charity. That comes several years after Cook said he would donate the majority of his wealth to charitable causes in a "systematic approach" to philanthropy.
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Or, if Apple continues to be as well-run as it is and Tim stays put, that theoretical money could increase.
me, I’m a “take the cash and run” kind of guy. 😀
As of the end of 2019 (both Apple's fiscal year and the calendar year), Mr. Cook had a total of 1,260,000 time-based RSUs and 560,000 performance-based RSUs remaining from the award he got in 2011 that were set to vest in 2020 and 2021. Those shares would be worth nearly $700 million today.
Mr. Cook didn't receive any new RSU awards in 2019 and hasn't received any since 2011, when he became CEO.
My guess -- based on Tim's public persona of fairness and equality -- is that his time-based grants are on the same vesting schedule as those of his line employees. In Silicon Valley, this has long meant 20% of the grant's shares vesting one year after the date of the grant followed by 2% additional vesting each month. Thus, to be 50% vested, it would take 1 year + 15 months. To be fully vested for that specific grant, it would take 1 year + 40 months = 4 years + 4 months.
Tim's sense of fairness shows up a bit in his $3 million salary. He is not playing that $1 annual salary game. He is still contributing to the regular social welfare pots: Social Security, Medicare, SDI, etc. plus other things like a pre-tax medical account ("cafeteria plan") and a long-term care policy. The rest of it is likely withheld for federal and state income taxes. I bet his actual bi-weekly pay stub is less than $50 net.
Silicon Valley has a nickname for these time-based grants; they are known as "golden handcuffs" because they incentivize the employees to remain with the company.
His performance based grants are probably described in the company's SEC filings. Note that these types of performance-based grants for senior executives don't automatically vest. They are reviewed and approved by the Board of Directors' compensation committee. Often, performance based grants are not fully granted if the company's performance falls short of the goals set in the grant. In this case, it is usually not an all-of-nothing deal and the compensation committee reduces the amount of awarded grant.
The Bloomberg figure would have to be that of exercised grants. An unexercised grant -- even if fully vested -- is still theoretical money. Cook -- like others in his category -- periodically exercise vested grants for the primary purpose of portfolio diversification.
Of course, the IRS does not care about unvested, unexercised grants. The only figure that is truly important is the value of the exercised grant. That is the number that the IRS (and Franchise Tax Board for Tim) look at.
My guess is that Tim also donates some of his fully appreciated stock to charitable organizations. There is a considerable tax benefit to donating equities.
https://www.marketwatch.com/story/carl-icahns-2-billion-apple-stake-was-a-prime-example-of-investment-inequality-2016-06-07
Steve Jobs built multiple companies from the ground up over the entire course of his life and had a net worth around $10b as a result. Some random guy buys some shares and makes 1/5th of that in 3 years.
If shareholders are going to be rewarded like that then so should the people who build the company into what it is. What I feel is the obscene part is not the award but that it doesn't apply to all employees, right down to the frontline workers. Companies should legally have to compensate all their employees with bonuses from the company's profits because they certainly get pay reductions and layoffs when a company makes losses.
With the changes, 8% of the total of 7,000,000 shares was to vest each year. That's 560,000 shares a year - 280,000 time-based and 280,000 performance based, depending on how Apple stock does. The other 20% of the award was to vest 10% after 5 years and 10% after 10 years, with those blocks just being time-based. So in 2016 Mr. Cook received an extra 700,000 shares and he's set to receive an extra 700,000 shares in 2021. Most, but not all, of his performance-based shares have vested over the years.
Mr. Cook has received no other RSU awards since he's been CEO. I'd add that he's voluntarily declined the dividend equivalents he's been entitled to based on his unvested RSUs (and which others in the company receive based on their unvested RSUs). That's already more than $76 million worth of dividend equivalents he's turned down.
Btw, the number is $133,700,000.00
There are some who believe that Mr. Cook is overcompensated and I won't argue with them, however there are plenty of other CEOs who deserve to be burned at the stake first.