Apple Inc. 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 disclosed that Cook received the 1 million restricted shares in August.
Cook’s potential payday ranks among the largest for a company executive and will gain more value 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.
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.
Top of List
The total puts Cook ahead of the highest-paid CEOs as ranked recently by Equilar Inc., which tracks executive compensation. Topping the list was Viacom Inc. CEO Philippe Dauman, who was awarded $84.5 million in the year that ended in September 2010, and Oracle Corp.’s Larry Ellison, recipient of $77.6 million in fiscal 2011. Occidental Petroleum Corp.’s then-CEO Ray Irani received $76.1 million in 2010, according to the September report by Redwood City, California-based Equilar.
Cook’s compensation is warranted because investors expect him 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.”
Navigating Through Crisis
Cook led Apple during Jobs’s three medical leaves, before taking the CEO position permanently, and has demonstrated an ability to navigate amid crisis. When the tsunami hit Japan last year, the company quickly found alternative sources for more than 100 components with few disruptions.
Cook isn’t the only Apple executive who has received millions of dollars worth of stock grants.
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.
The 10 highest-paid CEOs, according to a September report by Equilar, an executive compensation research firm:
Name Company Total Year Ending 1) Philippe Dauman Viacom Inc. $84.5 million 9/10 2) Larry Ellison Oracle Corp. $77.6 million 5/11 3) Ray Irani Occidental $76.1 million 12/10 Petroleum Corp. 4) Steven Udvar-Hazy Air Lease Corp. $57.8 million 12/10 5) Leslie Moonves CBS Corp. $56.9 million 12/10 6) Mario Gabelli GAMCO Investors $56.6 million 12/10 Inc. 7) Adam Metz General Growth $53.3 million 12/10 Properties Inc. 8) David Zaslav Discovery $42.6 million 12/10 Communications Inc. 9) Matthew McCauley Gymboree Corp. $37.1 million 1/11 10) Richard Adkerson Freeport-McMoRan $35.3 million 12/10 Copper & Gold Inc. Source: Equilar Inc.