Apple's Stock Performance Cost Tim Cook $4 Million, at His Insistence

Apple CEO Tim CookApple CEO Tim Cook

Apple CEO Tim Cook's pay took a US$4 million hit in Apple's fiscal 2013, and it was his idea. Because Mr. Cook asked the board to tie more of his compensation to his company's stock performance, and because Apple's stock did poorly from August of 2012 until August of 2013, he lost some $4 million in potential compensation, or almost half of his compensation for 2013.

All told, Mr. Cook took home a salary of $1.2 million, with another $2.8 million in cash bonuses, as reported in Apple's Preliminary Proxy Statement.

Tim Cook's CEO compensation wasn't originally as stock-performance dependent. Apple's board of directors designed a package where less than half of his potential bonus was based on the company's stock, but Mr. Cook insisted that it be moved to a full half to set a leadership example.

Apple's stock performed poorly during most of fiscal 2013, falling some 26 percent during the compensation period. That was far worse than the S&P 500, the benchmark set up for the package. So far, Apple's stock has performed much better in fiscal 2014, as the stock has risen considerably since the release of the iPhone 5s and 5c.

Mr. Cook also had some $36 million in options from earlier grants vest in 2013, for a haul of a little more than $40 million. Note that the shares vesting were effectively earned over a period of several years.

Looking to 2014, Tim Cook has another 205,000 shares of $AAPL that will vest in August and September, both in Apple's fiscal 2014. Those shares would be values at $113.7 million at Monday's closing price of $554.52, but again should be looked at in the context of the years over which they vested.

No matter how you cut it, however, Tim Cook is one of the highest paid CEOs in the world, though not, perhaps, the highest paid, even though the company he heads makes more money than all of them.

In addition, his vested and unsold holdings in Apple are worth some $49 million. Compare that to the $57 million in AAPL held by board member Al Gore and the $134 million held by Chairman Arthur Levinson.

While your comparing, Computerworld pointed out that outgoing Microsoft CEO Steve Ballmer owns 4 percent of Microsoft, a stake worth about $12.4 billion. Google Chairman Eric Schmidt owns 6.8 million shares of his company, and that's a stake worth $8.1 billion.

At the end of the day, all these tech icons are the living embodiment of the old aphorism, "A billion here, a billion there, and pretty soon you're talking real money." All these guys could pool& their wealth and buy something pretty nifty.

Shares of AAPL closed lower at $554.52, down 45.57 (-0.99 percent), on light volume of 9 million shares trading hands.

*In the interest of full disclosure, the author holds a tiny, almost insignificant share in AAPL stock that was not an influence in the creation of this article.