Apple

Now this is the real Apple Pay!

by Alan Friedman / Jan 04, 2020, 3:10 PM

By all accounts, 2019 was a pretty spectacular year for Apple, its customers and investors. The stock rose 89% during the 12 months and Apple made some changes to the iPhone that its fans were hoping to see. The camera was taken to another level with Night Mode, the addition of an ultra-wide lens, the use of computational photography with Deep Fusion and the introduction of Slowfies (a slow-motion selfie video). Apple also made the new models sturdier and enhanced the phones' water resistance. And battery life, once Apple's Achilles heel, is now one of the iPhone's strong suits.

Everything wasn't biscuits and gravy for Apple last year. The company's longest-running piece of vaporware, the AirPower wireless charger, was finally taken out to a backlot in Cupertino and shot last March. There was plenty of egg on Apple executives' faces that day. But overall, Apple executives did a good job guiding the company through the 12 months and you might have expected to hear that CEO Tim Cook banked a higher bonus. But according to SEC filings (via CNBC), Cook's total pay for 2019 declined 8% from the prior year's figure.

Apple failed to exceed certain targets by the same amount it did in 2018

At $3 million, the CEO's base salary remained the same from 2018. But the difference in pay year-over-year came from a reduction in the target payout executives received. As Apple stated in the SEC filing, "In 2019, Apple’s performance exceeded the target performance goals for both net sales and operating income, resulting in a total payout of 128% of the target payout opportunity for each named executive officer." That was down from the 200% of the target payout that Apple executives received in 2018 and simply indicates that the company failed to exceed its financial targets last year by as much as it did the previous year. The targets for 2019 were $256.6 billion in net sales and $60.1 billion in operating income. The targets are based on various factors including the global economy, foreign exchange trends and trade conditions.

Apple filed executive's compensation packages with the SEC

As a result of the lower target payout, Cook's bonus dropped to $7.67 million last year from $12 million the year before. The document filed with the SEC by Apple also notes that the company covered the $457,083 it cost for the executive's personal security services and another $315,311 in air travel that Apple paid. Also, a contribution of $16,800 was made by Apple to Cook's 401(k) retirement plan.

Cook's non-equity compensation came to $11.56 million compared to the previous year's $15.7 million. But that is all a drop in the bucket compared to the $113.5 million in Apple stock that vested for Cook in 2019. Adding up the executive's salary, bonus and vesting shares, Apple's CEO took in over $125 million last year. That figure was down from the $136 million he pocketed in 2018. By one computation, since becoming CEO in 2011 following the death of Steve Jobs, Cook has banked $963.5 million.

Three Apple executives were awarded lower bonuses last year because of the lower target payout. Chief financial officer Luca Maestri, chief operating officer Jeff Williams and general counsel Kate Adam had their non-equity bonuses reduced from $4 million to $2.6 million for 2019. However, all three received total pay of approximately $25.2 million last year.

Compare the pay received by these executives (including Tim Cook) to the median compensation received by an Apple employee last year of $57,596. That was up from the $55,426 median compensation received last year by those working for the company. Based on Tim Cook's non-equity compensation, the CEO made 201 times the amount of the 2019 median paycheck at Apple.

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10 Comments

1. darkkjedii

Posts: 31764; Member since: Feb 05, 2011

People can hate on Apple all they want, but Apple knows how to get that money. Its bottom line is always tip top.

posted on Jan 04, 2020, 3:38 PM 4

2. MrMalignance

Posts: 352; Member since: Feb 17, 2013

I agree. Of course it probably helps that they keep everyone buying accessories directly from them, rather than a 3rd party. Keeps the loop fairly closed.

posted on Jan 04, 2020, 5:14 PM 4

3. Dr.Phil

Posts: 2519; Member since: Feb 14, 2011

If by accessories you mean things like chargers or cables, I would have to say that it probably accounts for a very, very small percentage of their bottom line. Accessories is looped in with “wearables, home, and other products” under Apples spreadsheet which includes Apple TV, AirPods, and the Apple Watch. That category counts for 10% revenue. Considering how largely popular the AirPods and Apple Watch are alone, I would estimate only 1-2% of that 10% is from any accessory that they sell.

posted on Jan 04, 2020, 5:40 PM 0

5. MrMalignance

Thank you for you professional assessment. You're not a Dr. for nothing.

posted on Jan 04, 2020, 9:18 PM 5

4. cevon3239

Posts: 65; Member since: Jan 01, 2020

It's easy to make so much money, when everyone else is doing all the hard work, that has more cost associated with it. 100% of the parts in an iphone are made by a 3rd party. That's less cost for Apple and more money on profit. Other companies chose a model that isn't about profit margins. Some companies want a great product on the market, and if they make a product people wanna buy, they will and they have. They all make more money than you or I will ever make, which is why it doesn't matter. Samsung has working prototypes of chips made on 3NM FinFet. May PA will report on it.

posted on Jan 04, 2020, 6:22 PM 1

6. Vokilam

Posts: 1445; Member since: Mar 15, 2018

They say Apple fanatics drink too much coolaid, but there’s people like this guy... haha.

posted on Jan 04, 2020, 10:07 PM 2

8. Tsepz_GP

Posts: 1226; Member since: Apr 12, 2012

Dude, it’s business, EVERYONE is in it for profit and lowering margins, don’t fool yourself. Samsung are not some non-profit organization, they plan on making major margins on those 3nm chips, same way they do on displays. Any company that chooses a model that doesn’t eventually mean higher profit margins is stupid.

posted on Jan 05, 2020, 3:31 AM 1

9. midan

Posts: 3227; Member since: Oct 09, 2017

Exactly

posted on Jan 05, 2020, 4:25 AM 0

7. audibot

Posts: 689; Member since: Jan 26, 2017

yes tiptop but lets not fool ourselves, they dont deserve that pay, and most of it is funneled around the tax system by cpa's in "habituate for humanity and other" donate just enough to clear the audit i have seen it done a couple of times personally and its sick i pay my fair share most likely more then them.