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Apple publishes 2012 proxy statement, gives raises to execs

updated 08:30 pm EST, Mon January 9, 2012

Cue, Forstall getting raises; Cook gets $900,000

The board of directors for Apple have released the company's 2012 proxy statement as part of a call to shareholders for the 2012 annual meeting, which will be held on February 23, 2012 at Apple's main headquarters. Among the usual business of re-nominating the sitting board and recommendations of shareholder proposals, the company revealed that some of its top executives are getting raises to get them to par with the rest of the team.

Much has been made in some news stories of CEO Tim Cook's total (theoretical) compensation of nearly $377 million dollars, but most of it is speculative and will not be seen by Cook for years, if ever. When Cook was promoted to CEO of Apple on the recommendation of Steve Jobs, the board awarded him a million "reserved stock units" (RSUs) which will translate to shares of common stock. Half will vest in 2016, on the fifth anniversary of Cook's ascension, and the rest will vest in 2021. Both vestings are contingent on his continued employment with the company.

For accounting purposes, a value to the RSUs was assigned of the closing price of AAPL stock on the day it was awarded, which was around $376 per share. The value has gone up since then, as the stock is presently valued at nearly $422, but Cook cannot do anything with the options until 2016 at the earliest, at which point the stock may or may not be worth the same value as it was on the day he was awarded it, so any "compensation" from the stock options remains theoretical for another four and a half years, and is just as influenced by the path of the world economy as the performance of Apple going forward.

The proxy shows that Cook's actual salary for 2011 was $900,000, though this does not include any cash bonuses or any gains that may have come from previously-awarded stock options (the company tends to reward executives with options that vest a year or two after being awarded). Cooks' bonuses from 2009 and 2010 may have vested at the year's end, and could be worth in excess of $96 million if he cashed them in.

The report also shows that the board raised Senior Vice President of Internet Software and Services Eddy Cue's salary up to $700,000 per year (from its previous $444,000) in order to bring his compensation into line with the rest of the executive team (Senior VP of iOS Software Scott Forstall also received a raise for the same reason to $700,000, up from $600,000). The salaries of the executive team are actually on the low end of the median for corporations of Apple's size and revenues, particularly in the area of bonuses (where executives can be awarded up to 50 percent of their annual salary). Cue received a bonus of 100,000 RSUs that vest in two years' time as part of his 2011 compensation earlier in the year. At current prices, they are worth over $40 million.

Apple is taking advantage of some fairly new SEC policies to allow for mainstream distribution of proxy materials via the internet, and also using the practice of "householding" to limit paper versions of the lenghty pack of proxy materials to one copy per household, though more can be made available through written or oral request.

The proxy packet also details four shareholder-based proposals to be voted on at the annual meeting, including proposals that the company declare any political contributions, that they reveal details of how much influence directors have on corporate policy, that the company adopt a "say on pay" shareholder vote on executive compensation, and that they disclose any policies that could financially benefit board members (the latter very specifically directed at Al Gore and his investments in environmental companies and causes).

The board has recommended a "no" vote on all the shareholder-based proposals, but points out that it disapproves of the shareholder-proposed version of the "say on pay" idea but has endorsed a similar proposal already on the ballot. The board also mentions that the proposal for the company to reveal political contributions doesn't go as far as the company already does in reporting lobbying and other politically-based expenditures (Apple spends comparatively very little in this area compared to other tech giants).

The board meeting will take place at 10 a.m. Pacific time in Building 4 of the main campus.

by MacNN Staff




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