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Apple Executive Compensation Highlights

January 29, 2015

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Apple’s Recently Filed Proxy

On Thursday, January 22, Apple Inc. (AAPL) filed its annual proxy for the upcoming shareholder meeting. Provided in the proxy is compensation information for its named executive officers (NEOs), notably including CEO Tim Cook and Senior Vice President of Retail and Online Stores Angela Ahrendts (who joined the company in May 2014).

Tim Cook’s Compensation Highlights

Apple’s CEO saw his compensation package increase in a few aspects in Fiscal 2014 (Apple’s Fiscal Year End is September 30). The following is a list of the significant changes to his compensation:

• In February 2014, Mr. Cook’s base salary was increased from $1.4 million to $2.0 million.

• Also increased in February 2014 were the target and maximum annual bonus levels for all NEOs, from 100% of base salary to 200% and from 200% of base salary to 400%, respectively. Apple had paid out annual bonuses at maximum over the past three years and again paid out at maximum in Fiscal 2014. Mr. Cook’s bonus paid out at $6.7 million, which was a combination of his previous maximum of 200% of base salary and the new maximum of 400% of base salary.

• Cook has not received any equity grant since the mega-grant given him in 2011.

• For the first time in Fiscal 2014, Mr. Cook’s All Other Compensation included $699,133 for security expenses, which Apple stated was for his home and personal security.

• Cook’s Total Compensation, as reported in the Summary Compensation Table, was $9.22 million.

Angela Ahrendts’ Compensation Highlights

Appointed in May 2014, Apple’s Senior Vice President of Retail and Online Stores received a notable compensation package in Fiscal 2014. The following is a list of some of the elements from her compensation package:

• Ahrendts’ base salary was established at $1.0 million. Her salary was prorated to $0.4 million since she started mid-year.

• As previously mentioned, the target and maximum annual bonus levels were established at 200% of base salary and 400% at base salary, respectively. Ms. Ahrendts’ received a maximum payout which was also prorated to $1.6 million.

• Cook has not received any equity grant since the mega-grant given him in 2011.

• The majority of Ms. Ahrendts’ total compensation in Fiscal 2014 was related to her equity grants. She was granted three separate equity awards: two time-based awards in Restricted Stock Units and one performance-based award in Performance-Based Restricted Stock Units. Apple stated that one of the time-based awards (valued at $37.0 million) is comprised of “Make Whole RSUs,” which was granted to replace her Burberry awards. The remaining awards (valued at $33.0 million) were “New Hire RSUs,” which follow similar vesting conditions of the other NEOs’ annual equity awards.

• Ahrendts’ Total Compensation, as reported in the Summary Compensation Table, was $73.4 million.

Comparative Look at Certain Apple NEO Compensation

Fiscal 2014 was a landmark year for Angela Ahrendts’ compensation as Senior Vice President of Retail and Online Stores. When isolating Ms. Ahrendts’ and Mr. Cook’s Fiscal 2014 compensation, Ms. Ahrendts received a significantly larger compensation package. An important detail of Tim Cook’s compensation is the mega-grant of 1 million shares given to him when he assumed the CEO position in 2011 (now 7 million shares since it was granted prior to the 7:1 stock split in 2014). This grant was valued at $376.18 million on the day it was granted and is now valued at $786.8 million using the closing stock price on January 22. Fifty percent of this award vests in 2016, and the remaining 50% vests in 2021; therefore, Mr. Cook will realize half of the award next year, thereby making Tim Cook’s overall compensation still significantly larger than Angela Ahrendts’.