Highlights from Apple's Preliminary Proxy Statement, Shareholders Meeting Questions

Apple this week released a preliminary proxy statement in a filing to the SEC. The filing is an announcement of the 2013 annual stockholders meeting, as well as questions that will be voted on at the meeting and details of executive compensation arrangements.

Among other things, the filing details CEO Tim Cook's total compensation for 2012. His base salary for fiscal 2012 was increased to $1.4 million in cash from $900,000, reflecting "his responsibilities for the overall leadership of the Company". The bonus program for senior executives allows for targeted and maximum bonuses of 100% and 200% respectively, depending on performance of the company.

Additionally, following the restructuring of executive responsibilities in October 2012, Apple increased the 2013 base salary of executive officers from $800k to $875k to "recognize the additional responsibilities" given to the officers.

NewImage
Apple also gives stock awards to executives in the form of restricted stock units or RSU's. These RSU's are awarded to executives with a certain vesting date in the future, when they will turn into normal shares of AAPL stock. They are intended to encourage officers to remain with the company, but are designed to be more favorable than stock options for tax purposes.

In 2011, Apple awarded Tim Cook 1,000,000 RSU's upon his promotion to CEO -- half will vest in 2016, and the other half in 2021. As a result, his "total compensation" was in the range of $378 million last year, though this is de facto inaccurate because, as Apple stated at the time, the award was intended to be viewed as spread over 10 years. This didn't stop Bloomberg from claiming in a now-changed headline that Cook's pay had dropped 99% from last year to this. Instead, Cook's total compensation this year amounts to just over $4 million in cash and bonuses.

NewImageWe now have more details regarding the changes made to SVP Bob Mansfield's compensation package to encourage him to stay with the company. It was previously reported by Bloomberg Businessweek that Cook offered Mansfield "an exorbitant package of cash and stock worth around $2 million a month" to stay with the company.

According to a lengthy disclosure in the proxy statement, Mansfield's compensation change was largely related to how the company treats the vesting of his RSU awards after he announced he was going to retire:

The Compensation Committee believed the modification was appropriate given that Mr. Mansfield’s compensation, like that of the other executive officers, is weighted considerably toward long-term equity awards, Mr. Mansfield was expected to perform services for a significant portion of the vesting period, and Mr. Mansfield was expected to contribute to several important projects during the transition period. The Committee believed that a modification of Mr. Mansfield’s existing RSU award, rather than a grant of a new RSU award or cash bonus, was the appropriate incentive for Mr. Mansfield to continue providing services to the Company. Therefore, no other changes were made to Mr. Mansfield’s compensation.

The Committee modified the vesting schedule of Mr. Mansfield’s November 2011 RSU award so that the RSUs that would have vested on June 21, 2013 instead vest daily over the period from March 24, 2012 to June 21, 2013, subject to Mr. Mansfield’s continued employment by the Company. The March 24, 2012 date was chosen because it was the most recent vesting date of an RSU award held by Mr. Mansfield.

With regards to the shareholders meeting, there will also be votes on six proposals related to compensation, director reelection and more. The proposals are detailed in the proxy statement, but there is nothing out of the ordinary in them.

The 2013 Annual Meeting of Shareholders will occur at Apple's 1 Infinite Loop headquarters on February 27, 2013 at 9AM.

(Tim Cook image via AllThingsD/Asa Mathat)

Top Rated Comments

ikev85 Avatar
111 months ago
MOD NOTE

This is the PSRI spin-off thread for the front page thread discussing Apple's preliminary Proxy Statement. (https://forums.macrumors.com/showthread.php?t=1515020)

___________

all whilst paying their retail employees $9/hr

Thanks capitalism. :rolleyes:

out of touch.
Score: 3 Votes (Like | Disagree)
iphone495 Avatar
111 months ago
Anybody else don't know what a proxy statement is?
Score: 3 Votes (Like | Disagree)
IJ Reilly Avatar
111 months ago
I can understand why some of the posts in this thread could be viewed as off-topic, but when the topic itself is the compensation of company executives, it's difficult to know where that topic ends and the topic of compensation for everyone else begins. I hoped that this discussion would be allowed to continue so long as it did not turn "political," which I don't believe it ever did.
Score: 1 Votes (Like | Disagree)
THOPMedia Avatar
111 months ago
You realize I hope that working 40 hours a week at these wages adds up to less than $25k gross per year, and this assumes a person can get 40 hours a week. Usually they can't -- full-time work in retail is typically not available, as the retailers maximize part-timers to keep benefit expenses down. These are basically dead-end, burnout, poverty wage jobs with almost no opportunity for advancement. It is hardly comforting to know that Apple is only one of the best of the worst.

This hasn't got much to do with what Apple's top execs are paid, but it does serve as yet another example of how the distribution of wealth has migrated over the past 30-40 years. Apple can't be expected to fix this problem, at least not all by themselves -- but just the same, it is not something to be treated as good and normal, let alone, celebrated.

You are generalizing all retail. Apple retail is one of the most highly sought after retail sales positions in the US. They are also one of the most fun places to work in the retail industry and certainly in consumer electronics retail. I have many friends who have worked at Apple retail stores and they love it! They have advanced into management quite frequently and have better job security than anyone else I know. Most of them have worked there for 5+ years. None of them are burnt out. They are my most active and healthy friends; physically, socially and emotionally. None of them are living at poverty levels of any kind. In fact most of them have decided to go back to school for more education.

You make one of the best places to work (for the average high school educated person) in America sound like the Great Depression.

Good job Negative Nancy.
Score: 1 Votes (Like | Disagree)
THOPMedia Avatar
111 months ago
all whilst paying their retail employees $9/hr

Thanks capitalism. :rolleyes:

out of touch.
Uhhh, try $11.82/hr average. Which is significantly higher than most retail sales.

Best Buy - $9.72
Target - $9.00
Walmart - $9.00

Out of touch
Score: 1 Votes (Like | Disagree)
deyorew Avatar
111 months ago
I have a different take.

Executive compensations are obviously less about their abilities, skills etc. After all, I know a lot of good Engineers who can also manage people well make a lot less than Bob Mansfield.

No, compensation is instead based on a lifetime of choices, risks, effort and in some cases social status, in others who they have met/impressed by chance along the way.

A store worker who chooses to earn $30K year after year obviously is making quite a bit different choice than someone like Bob Mansfield and Tim Cook did starting all the way back to which school they decided to go to, what they majored in and more importantly which first job they decided to take. After all these folks didnt invent the wheel here, they merely chose to get in with a company and met powerful people at the right stage. In some cases people do what they are good at and get noticed and promoted, but to get into the realm we are talking with these Apple execs, it takes a little more than than just being good at what you do.

I am not exactly speculating here, as an engineer who works as a manager in my mid 30's and compensation putting me in the top % of incomes in the US, its still quite a leap for me to get to the levels of Bob Mansfield who obviously made different choices and risks than I did. And i know this is more to do with impressing the right people at the right time in his career over competency at his responsibilities.
Score: 1 Votes (Like | Disagree)

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