updated 02:50 pm EST, Tue March 15, 2005
Apple execs net $50M
Apple executives cashed in on nearly $50 million in profit from exercising nearly 6.5 million options in 2004, according to its annual proxy statement filed with the Securities and Exchange Commission. Apple said that Jonathan Rubinstein, senior vice president of its iPod division, realized over $26.3 million in profit from exercising 3 million stock options. Rubinstein also received $485,000 in salary and nearly $6.4 million as a stock grant. Timothy D. Cook, executive vice president of worldwide sales, made just over $14.7 million from exercising 2.7 million stock options in addition to receiving nearly $7.7 million in stock grants and a salary of $602,000; slightly lower than his $618,000 salary in 2003.
Avadis Tevanian, Jr, senior vice president and chief of software, took home more than $8.8 million from 700,000 stock options, while receiving a restricted stock grant of $5.1 million. In addition, he received a salary of $470,000. in 2004, slightly up from his $456,000 salary in 2003.
The proxy statement also revealed that in fiscal 2004, only two executive officers received a bonus: Ron Johnson, Senior Vice President of Retail, received a bonus of $1.5 million--the same amount as he received in 2003--for exceptional performance. Meanwhile, Tevanian received a bonus of $1000 related to a patent award. Johnson also received nearly $6.4 million as a stock option grant and $484,000 in salary, but did not take home any monies from exercising his stock options. He has more than 3.2 million in unexercised shares, according to filing.
Apple also said that Steve Jobs received a salary of $1, but had no other compensation during 2004. Jobs has ten million shares of restricted stock that were granted to him in 2003 which vest in full on the third anniversary of the grant date. The vesting is subject to Jobs continued employment with Apple. He also has 120,000 fully vested options that he received in 1997 under the 1997 Director Stock Option Plan.
The filing said that since accepting the position of CEO, Jobs is no longer eligible for grants under the 1997 Director Stock Option Plan and receives no additional compensation for attending Board meetings. In March 2003, Jobs voluntarily cancelled all of his outstanding options, excluding those granted to him in his capacity as a director.
Apple said its executive compensation was based on an outside consultant's comprehensive market study report on Apple's compensation programs. The review found that the base salaries and total cash compensation for non-executive employees are competitively set at or above the median level of the compensation practices of peer groups; it also found that base salaries for executive officers, other than the CEO, are competitively set between the median and 75th percentile (following salary increases in fiscal 2004) and that the grant of stock options and/or other equity awards are generally at market median of grants made by comparable companies, when annualized over the term of the vesting period.
However, the study also found that the total cash compensation paid to Apple's executive vice president and senior vice presidents "is not competitive and falls significantly below market median due to the absence of a cash bonus program." The filing also said that the infrequent grant of stock options and/or other equity awards is insufficient to make up for the less than competitive total cash compensation paid to executive officers.
The consultant found that Apple's executive compensation program was "not competitive and is not currently structured to attract, retain and reward executive officers whose contributions are critical to the long-term success of the Company." The review recommended that the Compensation Committee of the Board adopt a performance bonus plan and consider more frequent smaller grants of equity awards.