According to salary information collected by Glassdoor, Apple pays its engineers much less than the industry average. This practice was essential when Apple was fighting to survive, but the practice no longer contributes much to Appleis Net Income according to Oren Hurvitz in his blog on Tuesday.
The author took a close look at Appleis annual 10-K filings and dissected each 170 page report to find out how much Apple spends on R&D and estimated what the impact would be, each year, if Apple engineers were paid as much as Google.
 From Mr. Hurvitzis blog |
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The assumptions and numbers are well documented and show that while these lower salaries contributed heavily to Appleis Net Income in 2003-2005, they no longer do so.
The natural question was then whether Apple will soon have a retention problem, or whether engineers (as the comments suggested) are wiling to work for a little less for the excitement and rewards of working for Apple.
Of course, the R&D budget, which the author surmises are close to 100 percent salaries are only a part of overall employee compensation. In addition, no attrition number were cited, and itis likely that turnover at Apple remains low compared to the industry average. Even so, the exercise shows what can be done by looking at Appleis 10-K numbers in a little more detail.
TMO notes that in 2007, each Apple employee received a free iPhone with a cost to Apple in the US$200 range. That pales in comparison to a 3 percent raise on $89,000 which many would have accepted instead.