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Apple rewards Tim Cook’s lacklustre performance

by on29 August 2016

27 percent drop in profits and nothing new coming is worth a bonus

Apple may not have invented anything new for years, be watching its cash cow die with no replacement, but that has not stopped Tim Cook trousering a huge cash bonus this year.

It was announced in a Securities and Exchange Commission filing that Cook had received 1.26 million shares of Apple stock, valued around $135 million. He now has hit the halfway point of a stock compensation plan that could see him awarded seven million shares by 2021, regardless how well the company does under his leadership.

Cook earned the bulk of the shares, 980,000, by remaining CEO for five years - a feat which could have been achieved by barricading himself in his office, not talking to anyone and making no decisions which could get him fired.

Bizarrely he also got an additional 280,000 shares because Apple stock outperformed more than two thirds of the companies in the S&P 500-stock index over the past three years. So while Apple has done badly, it has still done better than anyone else so apparently the Board thinks Cook is doing a great job. Cook has hit his performance goals, but Apple has stumbled lately. Its shares are down almost 20 percent since their all-time high in May 2015, amid slowing demand for its smartphones and tablets. In July, the company reported a 27 percent drop in quarterly profits as iPhone sales slumped. The company is expected to introduce new iPhone designs next month.

According to the filing, Cook sold $36 million worth of this stock, and forfeited another $71 million to pay taxes – at least someone in Apple is doing this. Under Cook’s watch a huge chunk of Apple cash has been sitting offshore in tax havens.

In the fiscal year ended September 2015, he was paid $10 million in salary and bonus, but received no additional grants of stock or stock options.

When he took over as Apple's chief executive in 2011, Cook was given one million restricted stock units -- now equal to seven million, following Apple's 2014 7-for-1 stock split. Under the initial grant, half of those shares were to vest this year.

Last modified on 29 August 2016
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