Reporting by XinZhiyuan
Editor: Yuan Xie
After Apple became the world's first company with a market value of $3 trillion, CEO Cook received a salary increase of nearly $100 million. What is the connection between the two?
In the network, "promotion and salary increase, as general manager, marrying Bai Fumei, and climbing to the peak of life" is a progressive and iterative relationship. However, in real life, the real peak people also need to use salary increases to reflect the peak.
In the first week of 2022, after Apple became the world's $3 trillion public company, the compensation committee of the company's board of directors announced that CEO Tim Cook had a salary increase of more than 6 times, and Cook's annual salary has since been nearly $100 million.
How much does Cook earn in a year?
According to Apple's regular proxy statement prior to its annual general meeting in March 2022, CEO Tim Cook's base salary, stock and other compensation totaled $98.7 million.
Cook's base salary is $3 million, and the salary increase is mainly reflected in the newly granted $82,347,835 "Restricted Stock Unit" (RSU). Restricted stock units (RCUs) are a form of stock-based compensation that cannot be sold if certain conditions are met and cannot be sold if certain conditions are met.
Part of Cook's RSU pay raise comes from Apple's "long-term equity incentive program" that began on the first day of fiscal 2021, consisting of an RSU of $44.8 million with an exercise limit on performance and an exercise limit of $37.5 million. These RSUs will not be exercised until after 2025.
In addition to the above, Cook received $12 million in non-equity incentive program bonuses and $1,386,559 in "other" category compensation. Those compensation included $17,400 in employee pensions, $2,964 in employee life insurance, $23,077 in vacation expenses, $630,630 in security costs and $712,488 in "personal air travel expenses."
For safety and productivity reasons, Apple provided a private jet service to Cook. The resulting "Individual Air Travel Expenses" consist of flight costs based on mileage hours, floating fuel costs, airport take-off and landing costs, etc.
How big is Cook's salary increase relative?
Perhaps because most of the people at the helm of tech giants are super rich, Cook's salary increase is not particularly prominent. However, compared with the rich CEOs such as Musk, Bezos, and Zuckerberg, Cook's identity is fundamentally different: Bezos are the founders, major shareholders, and actual owners of the company, but Cook is not the actual owner of Apple, but the senior workers who took over after the death of founder Jobs.
Therefore, Cook's value is reflected in the proportion of salary is far greater. Cook's compensation was $11.5 million in 2019 and slightly increased to $14.7 million in 2020, without equity incentives such as RSU. The salary increase for RSU in 2021 is 6 times higher than the salary in the previous year.
And according to the data in the same proxy statement, the median compensation of apple's ordinary employees in 2021 is about $70,000. Cook's annual salary is 1447 times that of a single average employee. Even among Apple's top managers, such as CFOs, COOs, legal department heads, sales leaders, etc., each person's annual salary is only about $27 million.
Why did Apple raise Cook's salary?
The proxy statement directly and concisely explains the reason for Cook's salary increase: "Since taking over as CEO in August 2011, Cook has led Apple through a brilliant decade, so for the first time in 2021, it will give equity incentives... The amount of salary increase is related to Apple's size, performance achievements, and profit efficiency during his employment, and equity incentives are the most direct, sustainable and effective way."
And the praise in the document, Cook is indeed well-deserved. In the decade helmed, Apple not only occupied the leading role in the global smartphone era with continuous renovation of iPhone models and functions, but also made Apple firmly occupy the head of the world's smart mobile device market with products such as iPad, Apple Watch, and AirPods.
In terms of 2021 alone, Apple's new iPhone entered the 5G track in time. In addition, stimulated by the new crown epidemic, people working from home and going to school have purchased Apple computers and tablet devices in large quantities. That allowed the company's stock price to rise 80 percent in a year, reaching the point where it would become the world's first $3 trillion company by 2022.
Not only that, but in 2017 Cook announced that he would double Apple's share of the services business in four years, when apple's total revenue in fiscal 2016 was $24.3 billion. Today, unlike in the past, thanks to Cook's efforts, apple services business revenue in fiscal 2021 is $68.4 billion.
Even under the influence of the supply chain crisis catalyzed by the new crown epidemic, according to the fourth quarter of 2021 financial report data, Apple's revenue in addition to Mac computers fell slightly year-on-year, and sales and revenue of iPads and wearable devices have increased. Among them, iPad revenue rose to $4.65 billion from $3.98 billion last year, accounting for 7% of overall sales, and revenue from the wearables, home and accessories segment rose to $6.52 billion from $4.22 billion last year, accounting for 10% of overall sales.
Now, Apple's software store, music, TV, games, news, fitness, cloud storage, mobile payment, warranty and other service businesses complement the hardware commodity system and build another soft business service ecosystem. In mid-December 2021, when some analysts successfully predicted that Apple would break through the $3 trillion mark in 2022, they also mentioned that the market value of Apple's service business would reach $1.5 trillion at the same time.
This figure means that if Apple's service business is split, the market value also exceeds the star companies such as Tesla, NVIDIA, and TSMC, which is comparable to the overall market value of Amazon. Of the 174 countries in the world that have reported GDP, Apple's services business can exceed the market capitalization of 142 of them, equivalent to the annual GDP of Ukraine, Hungary, Peru and Qatar combined.
Cook's annoyance
Although the scenery is unlimited, there will never be only good news around big tech companies this year. Although Apple has less negative news than its peers, it does not mean that Cook will be more relaxed to deal with, and various antitrust lawsuits and regulatory offensives continue to be repeated.
In April 2021, the European Union officially launched an antitrust lawsuit against Apple. If Apple loses, it will face a fine of 10% of global revenue. Based on 2020 revenue, the amount of the antitrust fine may reach AS much as US$27.45 billion (about 177.683 billion yuan).
In September 2021, Epic Games ruled against Apple in the United States: the U.S. federal court found that the "Apple tax" prevented consumers from getting cheaper prices, was anti-competitive behavior that harmed consumers, and required Apple not to restrict app developers from directing users to third-party payment systems.
On the last day of 2021, the Competition Commission of India (CCI) formally ordered an antitrust investigation into Apple's business practices in India, arguing that Apple's restrictions prevented some app developers and distributors from entering the market.
The real world is not unlike superhero comics, but after the overview of "greater ability, greater responsibility", the proviso "the richer the money to spend, the greater the trouble" must be added. Cook and Apple, whose revenue and lawsuits have increased at the same time, are the best annotations to this description.
Resources:
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