Just recently, Apple CEO Tim Cook saw his overall compensation increase by 2% compared to the 2012 fiscal year up to $4.25 million total. However, ComputerWorld is now reporting that the board has reduced Cook’s amount of vested stock grants by nearly $4 million, citing Apple’s subpar performance compared to the S&P 500’s over the last year.
When Tim Cook took over as CEO in 2011, the board of executives gave him one million shares that would vest equally between August 2016 and August 2021. However, Cook urged the board earlier this year to revise the setup, requesting for the money to be spread out across 10 years and tied to company stock performance. The board therefore converted 80% of his one million shares to this performance deal. Unfortunately for Cook, Apple finished in the lower third for this most recent 12-month period, which made him lose 7,123 shares valued at nearly $4 million.
Because Apple’s TSR was in the bottom third, Cook forfeited 7,123 shares, which were valued at $3.6 million on August 24, the day they were to vest. At Friday’s closing price, the shares Cook lost would have been worth almost $4 million.
But no one should weep for Cook: The 72,877 shares that did vest on Aug. 24 were valued at $36.5 million at the time, and assuming he did not sell any, $40.8 million at Friday’s closing.
Tim Cook now has the option to forfeit a quarter of the 80,000 shares slated to vest next August if Apple ends up in the middle third of the S&P 500, or 40,000 shares if the company lands in the bottom third.