The board of Apple Inc has decided to link a larger proportion of chief executive officer Tim Cook's compensation to the performance of the company's shares, in a decision that followed discussions with the company's largest shareholders.
Apple's investors are irate after seeing their shares drop 42 per cent from a record high of $705 in September. Cook, who presided over the fall, had himself approached the board to impose a performance criterion on his yet-to-be-vested stocks, according to a filing with the US bourses on Friday.
Cook, who in 2011 received one of the largest stock-reward packages on record – currently worth over $413 million – requested the modification to his bonus, Apple's board said in a the filing. The change means about third of the CEO's stock rewards will now be subject to a drop in value, the directors said.
Cook was given 1 million Apple shares vesting over a decade after succeeding Steve Jobs as chief executive in 2011.
The size of Cook's future stock awards will depend in part on how the company performs compared with other companies in the Standard & Poor's 500 Index.
Of the 1 million shares Cook was awarded two years ago, half were to vest in 2016 and the rest in 2021. After the changes, Cook will receive 100,000 shares in 2016 and another 100,000 in 2021 if he remains with the company, while the rest will be given out in annual increments.
Investors including the California Public Employees' Retirement System have urged Apple and other companies to link pay more to the stock price.
''Mr Cook is leading this initiative by example and has the full support of the board of directors,'' the board's compensation committee said in the filing. The changes are effective 21 June, Apple said.
Apple is facing heightened competition from Samsung Electronics Co. Google Inc, and others in the smartphone and tablet markets. Apart from an updated line of MacBook Air laptops, Apple hasn't introduced a new product since October, increasing pressure on Cook to release a new device that can live up to the success of the iPhone and iPad.
Stock rewards for several Apple executives have also been vested, according to regulatory filings. Phil Schiller, Apple's marketing chief, Peter Oppenheimer, chief financial officer, Jeffrey Williams, head of operations, and Bruce Sewell, general counsel, each received 75,000 shares. Bob Mansfield, Apple's senior vice president of technologies, received 28,414 shares.
''Our executive team is incredibly talented and they are all dedicated to Apple's continued success,'' Steve Dowling, a spokesman for Apple, said. ''Most of the executive team has worked together for more than a decade and have been extremely effective by any measure.''