This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Why Steve Jobs Approved Tim Cook's 'New' Pay Structure

NEW YORK ( TheStreet) -- A circus has been created lately around Apple's (AAPL - Get Report) seemingly endless death.

The "grim reaper" is somehow always around the corner in Cupertino, Calif. and was last spotted glancing over Tim Cook's "new" compensation package and wondering whether Steve Jobs would have approved of it. My gut says that he did. Let's go over the details of Apple's new "poison pill."

A recent Apple filing with the Securities and Exchange Commission revealed that Apple has made changes to Tim Cook's restricted stock unit award -- making it the main driver of Cook's compensation as CEO. The filing states:

"Effective June 21, 2013, the Compensation Committee of the Board of Directors of Apple Inc. approved the amendment of the restricted stock units awarded on August 24, 2011 to Timothy D. Cook, the Company's Chief Executive Officer. The amendment does not change the original grant date fair value of Mr. Cook's award as originally reported in the Company's Proxy Statement filed with the SEC on January 9, 2012. It does, however, align Mr. Cook's potential realizable compensation from the award with Company performance, and reflects the Committee's intent to have a portion of future equity awards be performance-based for the Company's executive officers, and for Mr. Cook to lead by example."

First and foremost, let's understand that this is not a "new policy" that Apple has taken. Those who are proclaiming "Apple's death" and insisting that Steve Jobs is "turning over in his grave" because of this "new" pay structure must now acknowledge that Steve Jobs just might have signed off on this. The filing clearly states that this is an amendment, a term that typically means that a declaration (of sorts) already existed.

Further, the date on the document says that the original agreement was drawn on August 24, 2011, almost three months before Steve Jobs' death. And there's no debate that Jobs picked Cook as his successor. I'm not as skilled as others are in speaking on what Steve Jobs "would have done," but I'm inclined to believe that he would have been consulted on Cook's pay structure and subsequently signed off on it.

So, the idea that Apple's culture is suddenly falling apart because Cook has agreed to adjust his pay is complete nonsense. I say "agree" here because (again) there already was an existing agreement, so he didn't have to accept the amendment, and he wasn't forced to accept it.

Before we continue, let's not pretend that anger over CEO compensation, at any company, is a new issue -- it's not.

What CEO's are paid has been a hot topic for as long as I can remember. Not too long ago we were complaining about how the American taxpayer saw his or her money being used to bail out companies and banks that were on the brink of failure. The government was perceived as rewarding companies for poor performance because they were "too big to fail."

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
AAPL $130.42 1.26%
FB $80.41 1.07%
GOOG $555.48 2.13%
TSLA $207.19 1.68%
YHOO $44.45 0.04%


DOW 18,214.42 -10.15 -0.06%
S&P 500 2,110.74 -3.12 -0.15%
NASDAQ 4,987.89 +20.7530 0.42%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs