Apple CEO Tim Cook has repeatedly stated his disappointment with his company’s stock performance, and now he is sticking his money where his mouth is.
When Tim Cook became Apple’s permanent CEO in 2011, he was issued one million shares of Apple stock, half of which would vest in 2016 and the other half which would mature in 2021. The only condition for his bonus was that he remained with the company through each payout date. A new filing with the Securities and Exchange Commission, however, reveals that Apple’s Board of Directors are now tying Cook’s bonuses directly to Apple share performance.
In the new filing Bruce Sewell, Apple’s SVP and general counsel writes:
“Mr. Cook is leading this initiative by example and has the full support of the Board of Directors. He asked the Committee to apply a performance metric to his outstanding 2011 CEO equity award as well as any potential future awards. After careful deliberation, the Committee has approved a modification to Mr. Cook’s 2011 award.”
The new payout plan means Tim Cook can only match his original guarantee or lose money if his new performance metrics are not obtained. The filing continues:
“While the Committee generally believes that a performance-based award should have both a downside and an upside component, at Mr. Cook’s request, the modification does not contain an upside opportunity for over -achievement of these criteria.”
It’s not as if Tim Cook is hurting for cash after receiving $376 million from Apple in 2011, although much of that bonus was given in the form of stocks, which have lost nearly half of their original value. In 2012, Tim Cook received a base compensation of $4.17 million.
Apple closed on Friday at $413.50. That number is down from a $705 high point for Apple stock in September 2012.
Do you think Tim Cook can turn Apple around and earn his full bonus before 2016?