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Apple CEO Tim Cook is a rare billionaire who doesn’t own founding equities in the company he runs. ANGELA WEISS/AFP via Getty Images
In August 2018, Apple made history and became the world’s first company worth more than $1 trillion. It took the iPhone maker just two years to grow past the $2 trillion mark. And this time, its CEO Tim Cook earned a big bonus for himself, too.
On Monday, Cook received 560,000 Apple shares, worth a whopping $282.8 million at current market price, as part of an annual payout of his equity award package signed nine years ago when he succeeded Steve Jobs.
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When Cook took the helm of Apple in 2011, he was granted a restricted equity package then worth $376 million. The equity package is designed to be paid out over a period of 10 years on the condition that Apple stock consistently outperforms the S&P 500 index.
Under the agreement, Cook is eligible to receive 560,000 company shares every year if Apple’s three-year stock appreciation exceeds that of two-thirds of the S&P 500 companies. If Apple falls in the middle third, Cook’s equity payout will be cut in half. And if Apple ends the three-year period in the bottom third of the S&P 500, the CEO will receive no stock award at all.
As of Friday, Apple’s stock gain over the past three years (including reinvested dividends) was more than 200 percent better than the vast majority of S&P 500 firms, according to Bloomberg, which put Cook well above the threshold for the equity payout.
In 2020 so far, despite the economic impact of the coronavirus pandemic, Apple stock has been on an unstoppable run. At Friday’s close, Apple shares had doubled in value since the market crash in March and were up 60 percent from the beginning of the year.
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On August 10, Cook’s net worth crossed the $1 billion mark for the first time, a rare milestone achieved by executives who don’t own founding equity in the company they run. JPMorgan Chase CEO Jamie Dimon and Facebook COO Sheryl Sandberg are among the other few who have made the billionaires list.
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Equity award aside, Cook receives an annual base salary of $3 million, a performance-based cash bonus and other compensation, including pension and insurance. The Apple CEO has pledged to give away most of his fortune and has donated millions of dollars worth of Apple shares.