As a result of Apple’s performance based executive compensation packages, CEO Tim Cook and other leaders within the company will be taking pay cuts. Apple missed internal revenue and operating income targets for 2016 by 3.7 and 0.5 percent respectively, resulting in a 15 percent cut for the CEO.
Apple is reporting annual sales of $215.6 billion and operating income of $60 billion for the period ending September 24th 2016, according to a regulatory filing. Had the numbers not missed, Cook could have expected his 2015 compensation of $10.3 million to serve as a floor for 2016. Instead, the CEO will be hauling in $8.75 million.
The drop is more severe than Apple’s actual miss, relatively speaking. Other Apple executives saw a slightly more modest 9 percent drop in compensation. Mr. Cook’s base salary did increase by 50% to $3 million — not to mention his large Apple stock holdings which haven’t been touched.
This is the first time the company has missed its internal targets since 2009. Apple’s growth story has been somewhat cyclical, but every time the company’s value was in question, it delivered. Coming off a year that was neither failure nor success, the obvious question is whether the company can rebound.
While some see the forthcoming 10th anniversary iPhone as make or break product for Apple, others point to the company’s growing services business as a potential salve. Left in the dark by Apple’s highly secretive R&D team, we can speculate near infinitely about a game-changing VR or AR device or heck even a self-driving car.
Apple’s trading today doesn’t reflect a particularly hostile investor reaction. Apple shares are up over a percent on the day.
The news about Cook’s compensation just simply isn’t that surprising. This was the year that Apple showed its vulnerability — the year that the sales volume of the company’s most important product, the iPhone, fell for the first time…ever.
Eyes will be on Apple when it reports details on its first quarter results later this month on January 31st. This should provide additional clarity on sales of the iPhone 7 among other things.