Due to the poor performance of the Apple stock in the 2013 fiscal year, the tech company's board removed almost $4 million in stock vesting restrictions on the pay package of Apple CEO Tim Cook.
Computerworld cited Apple stock's performance vis-à-vis the S&P 500 over a 12-month period as the basis of the company's decision, although Mr Cook still got a total compensation package of $4.25 million for the period, which is a 2 per cent increase compared to the previous year.
REUTERS/Robert Galbraith Apple Inc CEO Tim Cook holds up the new iPad Air during an Apple event in San Francisco, California Oct. 22, 2013.
The preliminary proxy statement filed last week with the U.S. Securities and Exchange Commission provided details of the compensation of Mr Cook and four other Apple executives for the period that ended Sept 28, 2013. Besides Mr Cook, the statement also included the compensation packages of Eddie Cue, head of Apple's online efforts; Peter Oppenheimer, CFO; Daniel Riccio, lead of Apple's hardware engineering and Jeffrey Williams, chief of operations.
The report said the $4.8 million pay package of Mr Cook was broken down into $1.4 million salary, $2.8 million bonus, about $60,000 for sundry expenses and $35,000 vacation time converted to cash.
None of the Apple executives actually were given stock awards in 2013, but Mr Cook received a large award in 2011 when he became CEO a month after Apple co-founder Steve Jobs died. After granting him the stock award, the board locked in Mr Cook with 1 million shares that would vest in equal parts in August 2016 and August 2021.
In 2011, the shares were valued at $383 million, which by now had ballooned to $560 million.
But in early 2013, Mr Cook asked the board to revise his vesting schedule from 2 major ones to spread it over 10 years and linked to Apple's stock performance.
Mr Cook's new pay-on-performance deal covers 88 per cent of the 1 million shares, half of each year could be eliminated or cut if the company's shares are not in the top third of the S&P 500 based on the total shareholder return which combines appreciation of share prices and dividends paid to shareholders.
With Apple's TSR in the bottom third, Mr Cook forfeited 7,123 shares valued at $3.6 million on Aug 24, the date of the vesting.
Apple share prices hit bottom at $390 per share in late June 2013, but it has improved since then although it is still over 20 per cent less than the peak price of $700 in mid-September 2012.
While Seeking Alpha contributor Bret Jensen believes that the momentum enjoyed by Apple shares in mid 2013 would continue in 2014, he forecast that the shares of the Cupertino-based tech giant would reach $650 this year.
Among the basis of Mr Jensen's optimism is the signing by Apple of China Mobile and NTT Docomo which could translate into over 800 million consumers who could buy a new iPhone on their current network, which is over all the consumers in the eurozone, U.S. and Canada combined.