Apple Board Modifies Tim Cook CEO Bonus Stock Award to Be More Performance Based

Apple's Board of Directors has elected to modify the award of restricted stock that Tim Cook received after being promoted to CEO in August 2011. The modification, made at Cook's request, changes the award of 1,000,000 restricted stock units -- originally supposed to be awarded in two lump sums over 10 years -- to a more performance-based compensation system.

A restricted stock unit, or RSU, is a form of compensation valued in terms of company stock, but the stock is not issued at the time of the grant. Instead, the recipient gets shares of stock at a later date, generally only if they are still employed by the company.

According to a filing with the SEC today, the Compensation Committee of the Apple Board of Directors approved the amendment of the award from August 2011, though the amendment does not change the fair value of the grant as of the day it was rewarded.

The Committee intends for future stock awards to Apple executives officers to be performance-based and Cook will lead by example. However, though normal performance-based compensation normally has both an upside and downside, at his request, Cook's award will solely have a downside component.

Under the adopted modification, Mr. Cook will forfeit a portion of the 2011 CEO equity award, which was previously entirely time-based, if the Company does not achieve certain performance criteria. 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 overachievement of these criteria. As a result of implementing a modification with only downside risk, the Committee has determined that a portion of the original grant should vest earlier than originally scheduled. This modification will not change the award’s original value for accounting expense purposes.

The original award would have given Cook 500,000 shares of Apple stock in August 2016, with another 500,000 in August 2021.

The new, amended package will give Cook 100,000 RSU's in August 2016, another 100,000 RSU's in August 2021, and the remaining 800,000 RSU's in ten equal allotments over the ten-year life of the initial award.

In order to receive the 80,000 share annual award, Apple's 'total shareholder return' will be compared to companies in the S&P 500. If Apple's performance is within the top third of that group, the award for that year will vest in full. If its performance is in the middle third, the award will be reduced by 25%, and the bottom third, the the award will be reduced by 50%.

As a result of the changes Cook will receive at least 672,877 shares of Apple stock by the end of the award in 2021, with the possibility of 1,000,000 shares total if Apple continues to outperform its peers. The Form 8-K filing that Apple filed with the SEC today contains additional information about the modifications to Cook's award.

Top Rated Comments

(View all)
Avatar
96 months ago

Is more symbolic than anything else but it is clear that Apple is not the same company and that there is not actual innovation.

1. The Mac Pro... it is just hardware but the shape is not wow at all.
2. iOS7 new interface looks weak
3. The rest of the peripherals are just thinner.

So... yeap, a consumer company but not innovative and the CEO has to keep it that way.

i don't think you get apple. You're probably the same shill who argued that apple didn't invent the iphone and invent the ipod then come around and argue apple is all about looks that you don't agree with. Realize that looks are opinions and accept that people can agree/disagree with you. This reminds me of when they released the ipad, OH JUST A BIGGER IPHONE LOL INNOVATION, or when they released an ipod touch LOL JUST AN iPHONE W/O THE PHONE or released the retina display LOL ALL "MARKETING" TALK

ayway, back on topic. this is suspicious to me as tim cook also recently announced the stock buyback. it's obvioulsy good to have it be incentive based if he believes stock price will be going up and apple certainly will make sure of this.
Score: 31 Votes (Like | Disagree)
Avatar
96 months ago

The structure is all win and no lose for him, no matter how poorly he performs. What about that makes him a class act?

Because he already signed a contract that guaranteed him 1,000,000 RSUs so long as he kept the job. He voluntarily changed the terms so that if the shareholders suffer, he can lose as many as 600,000 of those RSUs.

He could easily--most would say "reasonably"--have asked for a tradeoff in the other direction. "I'm voluntarily putting 600,000 shares of contractually-guaranteed stock at risk if performance is bad, so how about I get something extra if performance is exceptionally good?" The board even said that for other executives, that would be the norm.

But he voluntarily said "no, I don't need the bonus if things go really well--just penalize me if they go badly." I would call that legitimately classy.
Score: 27 Votes (Like | Disagree)
Avatar
96 months ago
Similar to what Steve did

Steve Jobs famously made $1 a year and therefore relied on increasing stock price to make money. Tim's doing a similar move, essentially saying 'hey, if we're not doing well compared to others in the market, then don't give me as much stock as you already awarded me'.

In a country where CEOs get golden parachutes and bonuses that don't match performance, this is signal from Cook that he believes in the future of Apple and is willing to bet his stock on it.
Score: 24 Votes (Like | Disagree)
Avatar
96 months ago

Is more symbolic than anything else but it is clear that Apple is not the same company and that there is not actual innovation.

1. The Mac Pro... it is just hardware but the shape is not wow at all.
2. iOS7 new interface looks weak
3. The rest of the peripherals are just thinner.

So... yeap, a consumer company but not innovative and the CEO has to keep it that way.


1. Maybe not to you.
2. Maybe to you.
3. Innovation does not mean you revolutionize the mp3 market, phone market, tablet market every year.

Anyway, what big changes do you expect with todays hardware available for mass production?
Apple always was pulling the full potential out of available hardware and making every single competitor follow their example.
Score: 24 Votes (Like | Disagree)
Avatar
96 months ago
class act
Score: 23 Votes (Like | Disagree)
Avatar
96 months ago

Worst Decision… Can't innovate if you're focused on stock price...

So you'd rather have a caretaker CEO who can focus on nothing and still get paid as much?

I see this as entirely positive with no real downside. The job of the board and the shareholders is to determine if he's innovating and to fire him if not. This is just an added bonus if the company does well (and, historically, Apple has prospered the most during times of innovation, so innovation and stock price aren't mutually exclusive).
Score: 16 Votes (Like | Disagree)

Top Stories

Samsung Mocks Apple for Ditching Power Adapters With iPhone 12 Lineup

Thursday October 15, 2020 11:51 am PDT by
Samsung on its social channels is mocking Apple for removing the power adapter from the iPhone 12 lineup and other iPhone models, pointing out the fact that the Samsung Galaxy smartphones continue to ship with a power adapter. "Included with your Galaxy," reads a Samsung Facebook post that features a picture of a power adapter. Apple notably is no longer providing power adapters or...

iPhone 12 Pro Pre-Orders Already Selling Out With Delivery Times Pushing Into November

Friday October 16, 2020 6:35 am PDT by
Apple today opened pre-orders for the 6.1-inch models of the iPhone 12 and iPhone 12 Pro through its website and the Apple Store app, and estimated delivery times are already slipping into November for select configurations in the United States. Customers ordering a SIM-free/Pacific Blue/128GB version of the iPhone 12 Pro, for example, are already facing an estimated delivery window of...

HomePod Mini Cable is Non-Detachable, Ends With USB-C Connector for Use With Included 20W Power Adapter

Friday October 16, 2020 12:45 pm PDT by
While not detailed in the tech specs, MacRumors can confirm that Apple's new HomePod mini features a non-detachable power cable that ends with a USB-C connector for use with the 20W power adapter included in the box. With the switch to USB-C, the HomePod mini could potentially be powered by a wider range of devices and peripherals, ranging from MacBooks to USB-C battery packs with enough...

Apple's New MagSafe Charger and Cases Begin Arriving to Customers

Saturday October 17, 2020 10:10 am PDT by
Apple's new MagSafe charger and cases have begun arriving to some customers earlier than expected, and images of the accessories have started to surface on Twitter. The photos provide a first look at the products in real-world use. As of writing, some MagSafe cases are also available for pickup at select Apple Stores in countries like the United States, Canada, and Germany. Filip...

New Google App Feature Lets You Hum a Song to Search for It

Saturday October 17, 2020 4:05 am PDT by
Google has added a new feature to its Search app that allows you to hum a song that's stuck in your head, and then use the company's machine learning algorithm to try and identify it. In the Google app or using the Google Search widget, tap the mic icon and say "what's this song?" or click the "Search a song" button. Then start humming the tune for 10-15 seconds. When you're done, the...

Brazilian Certifications Suggest iPhone 12 Mini Features 2,227mAh Battery and iPhone 12 Has 2,815mAh Battery

Friday October 16, 2020 1:08 pm PDT by
Apple's iPhone mini has the shortest battery life out of all the iPhones in the iPhone 12 lineup due to its small size, but Apple has not provided public information about the battery's capacity. A regulatory filing from Brazil, however, suggests the iPhone 12 mini has a battery capacity of 2,227mAh. The same regulatory information says the iPhone 12 features a 2,815mAh battery, which is...

Apple Offering Free AirPods With iPhone 11 Purchase in India as Part of Diwali Celebration

Friday October 16, 2020 12:35 pm PDT by
Apple today launched a new Diwali promotion in India that will see the company providing customers with a set of AirPods with the purchase of any iPhone 11 model. The new iPhone 12 models are not part of the promotion. Apple is offering the standard AirPods With Charging Case free with purchase, but customers can choose to upgrade to the AirPods with Wireless Charging Case or the AirPods Pro....

Apple Event to Unveil First Apple Silicon Macs Could Happen on November 17

Friday October 16, 2020 2:24 am PDT by
Apple will hold another digital event on November 17 to announce its first Apple Silicon powered Macs, according to frequent leaker Jon Prosser. Apple has already said that this year it intends to introduce the first Mac powered by an Apple Silicon chip instead of an Intel processor. One thing it hasn't revealed is the date it will be announced. According to Prosser's source, that date is No...

Apple Online Store Down Ahead of iPhone 12 and 12 Pro Pre-Orders

Thursday October 15, 2020 11:15 pm PDT by
Apple's online store is down ahead of iPhone 12 and iPhone 12 Pro pre-orders, which are set to begin at 5:00 a.m. Pacific Time in the United States. "You're... early," reads the Apple Store message when attempting to visit the U.S. website. "Pre-order begins at 5:00 a.m. PDT. Enjoy the extra sleep." Apple used to do new device pre-orders at 12:01 a.m. Pacific Time, but since last year, has...

When You Can Pre-Order the iPhone 12 and 12 Pro in Every Time Zone

Thursday October 15, 2020 10:55 am PDT by
Pre-orders for the iPhone 12 and the iPhone 12 Pro are set to kick off on Friday, October 16 at 5:00 a.m. Pacific Time, which is a new launch time that Apple adopted as of last year. Apple is planning to make the new devices available in multiple countries around the world simultaneously, so we've made a guide to let MacRumors readers know when pre-orders will in their country. Pre-orders...