It isn’t often that CEOs negotiate a worse deal than the one they’re offered. Apple’s CEO Tim Cook isn’t your average negotiator.
At his request, his compensation package has been modified to be based upon performance rather than tenure. His original deal called for 1,000,000 restricted shares of stocks to be given to him in two batches over a 10 year period. The new deal, approved by the board, calls for performance restrictions to be placed on his compensation that ties the performance of the company directly into his ability to receive the compensation. He was going to receive 500,000 in 2016 and the other 500,000 in 2021. Now, he’s get it spread out over time and the amount gets reduced if the company isn’t meeting it’s goals.
According to MacRumors:
In order to receive the 80,000 share annual award, Apple’s ‘total shareholder return‘ will be compared to companies in the S&P 500. If Apple’s performance is within the top third of that group, the award for that year will vest in full. If its performance is in the middle third, the award will be reduced by 25%, and the bottom third, the the award will be reduced by 50%.In essence, he put over $135 million at risk if the company isn’t performing as well as it should be. This is a statement. Nobody doubted Steve Jobs’ passion for the company that he co-founded. Tim Cook hasn’t been under scrutiny over his commitment yet, either, but this assures that his goals and the company goals are clearly aligned. It’s a move that sends a message to any shareholders or employees that would ever doubt his intentions.
