Those of us who have had regular jobs know the joy of the bonus, a reward for working hard and producing results. Apple Chief Operating Officer Tim Cook found a little something extra in his pay envelope on 10 March 2010: $5 million plus 75,000 restricted shares of stock worth $17 million at today's prices.
Cook was rewarded for "outstanding performance in assuming the day-to-day operations of the Company for the period in fiscal 2009 during which Mr. Jobs was on medical leave of absence," according to an SEC filing by Apple. The stock grants are in two even pieces that can't be sold for one and two years as long as Cook is still employed on those dates.
Many executives at companies large and small are compensated far beyond the value to investors. I'm a great fan of Nell Minow, who has for the last 11 years documented at Corporate Library excessive and secret corporate payouts to underperforming leaders.
But Cook seems to deserve this one (I'm not a shareholder, and so the disbursement doesn't affect me directly). Cook was in charge of Apple for the first half of 2009, and the company didn't appear to suffer at all, despite handwringing by pundits who thought Jobs had the golden product-laying goose in his carry-on luggage.
The stock was around $100 per share near the end of 2008 and into 2009; it closed at $224.84 on the day Cook's shares were awarded. Company revenue and earnings were remarkable in the fiscal quarter ending in January 2010 (which included the holiday season). Apple increased revenue 32 percent over the year-ago quarter, and profit was up 50 percent. Apple has $40 billion in cash and short-term investments.
The company's market capitalization - stock price multiplied by shares outstanding - is over $200 billion, which means shareholders' stake in the firm has grown by about $115 billion in the last 14 months. Cook's bonus is two-hundredths of one percent of that increase.
The restricted stock is also a tiny set of handcuffs to keep Cook at the company, and could be worth much more than the $17 million the shares would sell for today. Two years ago, Cook exercised 300,000 options and sold them for around $140 per share, reaping about $40 million. Records show he retained just 14,000 shares in the company before this new, restricted grant.