‘Apple’s Cook is a steal at $65m in pay’

APPLE Inc.’s Tim Cook has been rated the best pay-for-performance rating of any Chief Executive Officer on the Bloomberg Pay Index, the first daily ranking of the highest-paid United States (U.S.) executives.

Cook was awarded $65.2 million in compensation last year and during the three fiscal years he has run Apple, revenue has risen by 69 per cent to $183 billion and net income grew 53 per cent to $39.5 billion, with sales of iPhones more than doubled to $102 billion.

“Apple is just unbelievably killing it. A good leader like Cook builds a team around him that can do the job,” said Dan Ernst, an analyst at Hudson Square Research in New York.

The 54-year-old’s awarded pay package, which makes him the 17th-highest paid U.S. executive, is dwarfed by Apple’s three-year average economic profit of $28.6 billion, the index shows.

The pay-for-performance measure used in the Bloomberg ranking is calculated using an executive’s pay as a percentage of a company’s economic profit, which is defined as after-tax net operating profit minus its cost of capital.

Cook’s pay is 0.2 per cent of economic profit, the smallest fraction of any CEO in the ranking, showing that investors are getting better returns on each dollar they pay Cook.

Apple gave Cook $9.2 million last year, including a salary of $1.8 million, a $6.7 million bonus and $699,133 for security, according to the summary compensation table in its proxy filed in January.

That figure doesn’t include 80,000 restricted stock units granted to him in August 2011, that were meant to compensate him for 2014.

Following a seven-for-one stock split in June, Cook’s 560,000 restricted shares were valued at $56 million at the end of the company’s fiscal year in September.

A spokesman for Apple, Josh Rosenstock, however, declined comment for this story.

The Bloomberg Pay Index tracks the 100 highest-paid executives, regardless of title, that appear in regulatory filings for companies that trade on U.S. exchanges.

Each executive’s pay package is updated every business day as fluctuations in stock prices change the value of their equity awards.

The ranking was published April 16, with the release of pay profile pages for more than 350 executives on the Bloomberg Professional service.

Each profile features an analysis of how much an executive can potentially earn and how his or her pay-for-performance is calculated.

Satya Nadella, who became CEO of Microsoft Corp. in February 2014, ranks as the second best deal for investors.

The $43.5 million that the world’s biggest software maker awarded him last year is equal to 0.4 per cent of its $12.1 billion economic profit.

A spokesman for Microsoft, Tony Imperati, however, disputed Bloomberg’s valuation.

The computer maker considers a $13.5 million one-time retention stock grant to Nadella as an award that should be annualized.

The index doesn’t annualize one time sign-on and retention awards because they’re not part of companies’ regular performance compensation plans.

Exxon Mobil Corp.’s Rex Tillerson is the third-best deal for investors and Coca-Cola Co.’s Muhtar Kent ranks fourth.
Tillerson’s $32.3 million pay is 0.7 percent of his company’s $4.8 billion three-year average economic profit.