Apple Inc. (AAPL) Chief Executive Officer Tim Cook will receive compensation for 2011 worth $378 million, one of the biggest pay packages on record, boosted by restricted stock awards that he’ll receive over the coming decade.
The total includes $376.2 million in shares, half of which will vest in five years and the remaining amount in 10 years, Cupertino, California-based Apple said yesterday in a proxy filing to shareholders. Cook’s base salary was $900,000 in 2011. The company, which plans to hold its annual shareholder meeting on Feb. 23, had previously disclosed that Cook received 1 million restricted shares in August.
Cook’s potential payday ranks among the largest for a company executive and will be worth even more if Apple’s stock rises, said Paul Hodgson, managing director at GovernanceMetrics International, a corporate-governance consulting firm. Apple said its board gave the stock options to help ensure Cook stays at the company. Steve Jobs, who passed the reins to Cook before his death in October, had given input about the pay package.
“If Apple continues its growth even at more modest levels than it has done in the past, then the award is going to far exceed anything we’ve ever seen,” Hodgson said.
Oracle Corp. CEO Larry Ellison received 2011 compensation valued at $77.6 million. At Microsoft Corp., Steve Ballmer’s pay package was worth $1.38 million.
Cook’s options are already worth more than what Apple valued them at in August, the month he switched from chief operating officer to CEO. At yesterday’s closing price of $421.73, Cook’s stock options are worth $421.7 million. The stock is little changed today at $423.38.
The compensation is warranted because investors expect Cook to continue releasing the kinds of products that made Apple the world’s most valuable technology company, said Kevin Dede, an analyst at Brigantine Advisors in New York.
“It did seem a little high, but I guess we live in a world where basketball players are getting multimillion-dollar salaries,” Dede said. “Apple is a great company, and he’s done a lot to make it a great company.”
Cook led Apple during Jobs’s three medical leaves, before taking the CEO position permanently, and has steered Apple through crisis. When the tsunami hit Japan last year, the company quickly found alternative sources to more than 100 components with few disruptions.
Cook isn’t the only executive who has received millions of dollars worth of stock option grants.
Doling Out Shares
In November, software executive Scott Forstall, hardware manager Bob Mansfield, Chief Financial Officer Peter Oppenheimer, marketing chief Phil Schiller, General Counsel Bruce Sewell and operation manager Jeff Williams each received 150,000 restricted shares, which vest between 2013 and 2016, according to regulatory filings.
Eddy Cue, who handles Internet software, received 100,000 shares after having received another 100,000 when he was promoted to senior vice president last year.
Jobs had compensation of $1 every year when he was CEO, though the board awarded him stock grants. The Apple co-founder owned 5.5 million shares at the time of his death.
Apple temporarily became the biggest company in the world by market value last year, before slipping back behind Exxon Mobil Corp. (XOM)
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