Times are tough in tech.
The sector was wiped out on the stock market last year as fears about the health of the economy intensified and the covid-19 pandemic took off again in China. That's where the factories of many tech groups are located.
In response to the economic worries, the tech groups slashed their costs, including waves of job cuts. Meta Platforms (META) - Get Free Report, for example, cut 11,000 jobs, a first since the social-networking giant started up in 2004. E-commerce giant Amazon (AMZN) - Get Free Report said it would eliminate more than 18,000 jobs.
In addition to the job cuts, projects have been abandoned and the pace of recruitment has been greatly slowed. That's particularly acute at Apple (AAPL) - Get Free Report, which has had logistical problems with the latest version of the iPhone, the 14. The world's largest company lost $846.34 billion in market value last year.
Cook Takes a 50.7% Drop in Pay
Given this context, tech's leaders needed to show that they were also ready to make personal efforts. Apple CEO Tim Cook just acted on this: He'll see his remuneration reduced by 40% for 2023, Apple announced in a regulatory document.
Cook is expected to receive total compensation of $49 million this year. It will consist of a base salary of $3 million, an incentive bonus of $6 million, and $40 million of shares.
This pay should decline 50.7% from 2022. Last year, the Apple CEO had received pay amounting to $99.4 million, including $83 million in stock awards, $12 million in incentives, and $3 million in salary. The pay also included contributions to a pension plan, security costs, air travel and more than $46,000 in paid vacation.
Last year was a slight increase from 2021, the year in which Cook received $98.7 million. But 2022 was a large increase compared with the previous two years: Apple's boss received $14.8 million in 2020 and $11.6 million in 2019.
The $49 million he should receive this year is still more than triple his 2020 compensation.
The decision to cut Cook's pay in 2023 from 2022 comes after criticism from some investors. Last year holders of less than two-thirds (64%) of Apple shares approved the CEO's compensation, compared with 95% the previous year.
Perhaps fearing an even tighter vote this year, Cook may have moved to avoid what would have been a further disapproving vote from holders.
The prominent investor-advisory firm Institutional Shareholder Services recommended that shareholders vote against the compensation package awarded to Cook at the last annual meeting.
Cook Asked for the Pay Cut
ISS also said that Cook, who succeeded Co-Founder Steve Jobs in 2011, was paid 1,447 times more than the average Apple employee.
"The compensation committee balanced shareholder feedback, Apple’s exceptional performance, and a recommendation from Mr. Cook to adjust his compensation in light of the feedback received," the company explained in a Securities and Exchange Commission filing.
It is rare to see a CEO himself recommending a reduction in his compensation.
While praising "Cook's outstanding leadership," the company decided to align his compensation a little more closely with performance criteria, in particular share price. In 2023, 75% of Cook's vesting shares will be linked to the performance of Apple's stock performance, instead of 50%.
Since Cook took over as CEO in 2011, Apple stock has risen 1,212% versus 290% for the S&P 500 index, the company said.
"Taking into consideration Apple’s comparative size, scope, and performance, the compensation committee also intends to position Mr. Cook’s annual target compensation between the 80th and 90th percentiles relative to our primary peer group for future years," the company said.
Cook is one of the richest CEOs in the U.S. His net worth is estimated by Forbes at $1.7 billion. It's much smaller than that of Amazon's Jeff Bezos or Tesla's Elon Musk, but unlike them the CEO of Apple did not found the company he leads.
He owns about 3.3 million Apple shares, or roughly 0.02% of the company's equity.
Cook in 2015 promised that he would donate his fortune to charity.