March 15, 2005 9:42 AM PST

Apple execs underpaid, board says

A year after granting more than $25 million in restricted stock to four top employees, Apple Computer's board said that the company's highest executives are underpaid and in need of a cash bonus program.

In its annual proxy statement, Apple said on Tuesday that infrequent grants of stock are not enough to make up for regular cash and stock-based bonuses, and it called on shareholders to approve a cash bonus program.

Last year, Apple's executives, with the exception of CEO Steve Jobs, received significant pay packages thanks to grants of restricted stock. Jobs received only his $1 salary and no stock grant, after receiving restricted stock worth nearly $75 million during the prior year.

Executive Vice President Tim Cook received a salary of just more than $600,000 and restricted stock worth $7.65 million. Senior Vice President of Retail Ron Johnson and iPod unit head Jon Rubinstein each received roughly $485,000 in salary and restricted stock worth $6.38 million. Chief Software Technology Officer Avie Tevanian received a nearly $470,000 salary and restricted stock worth $5.1 million. The value of the stock grants is as listed on March 24, when they were awarded, and the grants generally vest over four years, Apple said.

Three of the four executives also made a combined $50 million by cashing in previously awarded stock options. Rubinstein took home $26.4 million, Cook received $14.7 million and Tevanian garnered $8.8 million.

But Apple said the company needs to do more to retain top employees and called on shareholders to approve both the bonus program and an expansion of its employee stock option program.

"The ability to grant equity awards is a necessary and powerful recruiting and retention tool for the company to obtain the quality employees it needs to move its business forward," Apple said in support of the plan.

Under the cash bonus proposal, the board's compensation committee would establish the means for determining bonuses. These could be based on a number of factors, including the company's revenue, cash holdings, income, cash flow, return on assets, return on equity, total shareholder return or individual performance objectives.

Meanwhile, a separate shareholder proposal calls on the company to focus on restricted stock that vests over several years as a means of compensating executives for long-term performance. Apple's board is opposing that proposal, which was put forth by a metal workers' pension plan.

Apple has been on a roll, thanks in large part to the success of the iPod digital music player. The company recorded record sales and earnings for the December quarter, and its stock has been on a tear. Shares have nearly quadrupled in the past year, prompting the company to declare a two-for-one stock split in February.

The company hired a consultant to examine its pay practices last year. Apple said that while base salaries and stock grants were at or above the median for similar companies, the absence of a cash bonus program left the company's executive vice president and senior vice presidents with a cash compensation program that "is not competitive."

"The infrequent grant of stock options and/or other equity awards is insufficient to make up for the less-than-competitive total cash compensation paid to executive officers," Apple said in summarizing the consultant's findings.

Shareholders will vote on the various proposals and be asked to approve the company's slate of directors at Apple's annual meeting on April 21.


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Underpaid ?
So making 8.25 Million over all, Tim Cook is underpaid ?

Where do I go to get an under paid job like that ?
Posted by Sir Geek (114 comments )
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Republician Economics
Well, this is republician economics. 1% of a company should make 90% of the salary. Similar to the rest of the nation.

Sadly this isn't going to change unless the US becomes highly socialist, all of the baby boomers die off, or a new generation changes the rules (highly unlikely). All are highly unlikely.

Unless you where born into a upper middleclass or wealthy family you will never get a job like the one described. Unless you sell you soul that is.

Posted by zeroplane (286 comments )
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in response to story and prev comments..
'work hard and you will be rewarded is still very much alive here in the US..' (or however it was paraphrased) is total rubbish.
certainly if you're born into pretty much any average low income family - work hard and all you'll be lucky to do is get by..
if you're parents can even afford extortionate college fees, you've already been 'born into' an advantaged position only a low % of americans enjoy. lets be honest, making it into these or any other very high earning positions requires that you've probably come from a very privaleged background and if not that then a high level of greed (call it ambition if you will! lol), back-stabbing and general lack of decency and humanity are probably qualities that you've come to terms with (and given new and nicer sounding names).
come on you guys, socialism (fairness) is NOT communism and even that (in an ideological sense anyway because of course we know it doesn't really work!) is not a 'dirty word'. GET OVER IT! greed isn't good! you're so-called capital democracy and 'free-market' is not that at all. read a little!!! some keywords for you: pentagon war economy nafta gatt, eu cap, wto, world bank.
sorry to go off topic there, but these level of salaries mentioned above really BLEEP me off!!! i was thinking of buying an ipod today, but comparing bank balances - i've changed my mind!
Posted by benmantle (6 comments )
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ohh what the hell...
Your hardwork will never pay off for you. Someone elses hardwork will thought. I work hard everyday for my employer but it won't get me anywhere because i am working for him/her and not myself. To make a better life for yourself you have to work for yourself. But you can't work for yourself unless you can find the money. You can't find the money unless you have the education and you can't get the education without having a chance. I was given a chance to educate myself and I did. Now I will be stuck in a low paying job because here is no where else to go except india to find a job nowadays......
Posted by ntrlsur (21 comments )
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