Wednesday 17 January 2018

Cook's $145m pay packet tops charts among S&P 500 bosses

Laurie Meisler

Don't be fooled by Tim Cook's 2016 reported pay of $8.75m (€7.66m), which ranked the Apple CEO in the bottom third of all CEOs in the S&P 500.

Mr Cook (56) actually took home $145m, almost all of it from awards granted back in 2011.

He is not the only chief executive of a publicly traded US company to cross the $100m threshold for take-home pay, commonly referred to as "realised pay".

Reed Hastings (56), the CEO of Netflix, got $106m last year. Take-home pay for the top 25 S&P 500 CEOs who served in their positions for the last full fiscal year totalled about $1.65bn.

Bosses in the technology, healthcare and media industries dominated the list.

Take-home pay is the sum of the values of stock vested and options exercised during the fiscal year, along with cash from salaries, bonuses and perks.

Companies typically grant equity to executives as incentives each year.

Those awards are reported at their target values in the summary compensation tables of annual proxy statements.

But chief executives don't necessarily take ownership of those awards in the year they are given.

A better measure of earnings is the value of options that the CEOs exercised and the shares that vested (meaning they became entitlements) during the year. Those figures can vary significantly from companies' original estimates as stock prices change.

Mr Cook's 2016 take-home pay came primarily from the vesting of 1.26 million shares, valued at $136m, which were awarded after he became Apple's CEO, succeeding Steve Jobs, in 2011.

About one-fifth of the shares were tied to the firm's three-year total shareholder return relative to the S&P 500 Index.

Shares of the iPhone maker gained 78pc in the 36 months through the fiscal year ended September 28, placing it in the top third of the index.

The remaining 980,000 shares vested solely on his continued employment.

Mr Cook has now amassed more than $320m from vested shares of the 2011 award.

His $145m total take-home pay for fiscal 2016 also includes a $3m salary, a $5.37m cash bonus and $377,719 in perks.

In a 2015 interview with 'Fortune' magazine, Mr Cook said he planned to donate his fortune to philanthropy.

Netflix's Hastings took home $106m, the second-highest in 2016 for S&P 500 chiefs, almost entirely from exercised options that were granted as early as 2006.

Netflix shares have surged more than 3,000pc through the 10 years ended December 31, 2016.

Options, which generally can be held for up to a decade, were also given to the heads of tech and biopharmaceutical companies last year.

Leonard Schleifer (64), the chief executive of Regeneron Pharmaceuticals, earned $90m from exercising options. His $94m in take-home pay ranked him fourth.

Oracle's co-chief executive, Safra Catz (55), and Salesforce's Marc Benioff (52) collected $86m and $85m, respectively. Option exercises accounted for more than 90pc of their total.

Media chieftains got the most cash, the ranking shows.

Leslie Moonves (67), the boss of America's CBS Corporation, reaped a $32m cash bonus that was the largest since he became CEO in 2006 and accounted for almost 60pc of his total take-home pay.

Walt Disney's Bob Iger (66) got $20m cash as an incentive in 2016.

His payout was tied to financial metrics, such as operating income and returns on invested capital, and was 10pc lower than the previous year.

Mr Iger can earn a retention cash bonus of as much as $60m in 2018 if the company posts aggregate five-year operating income of at least $78.3bn.

(Bloomberg)

Irish Independent

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