Apple’s CEO Tim Cook received a 15% cut in last year’s bonus payment as the company failed to meet sales and revenue targets in 2016 – all while still receiving $135 million in shares (net) over the year.
Annual reports reveal that Cook was in receipt of a total of $8.75 million for 2016 – a figures combining salary and bonus which reduced the 2015 figure of $10.3 million by 15%, also coming in less than the $9.2 billion received in 2014. The company’s annual sales and revenue figures, published in Apple’s SEC filings, reveal that the company didn’t hit its $223.6 billion (£181.6 billion) target, missing it by 3.7%, achieving only $216.6 billion. Operating income missed its target by 0.5% reaching $60 billion.
Other executives at Apple felt the effects, facing decreases in pay of an average of 9.6% across the board. Angela Ahrendts, Senior Vice President, Retail (top executive earner) received $22.9 million for 2016.
Apple stated the following in its filing:
“Our 2016 performance with respect to net sales and operating income was 7.7% and 15.7% below our record-breaking 2015 levels; however, the 2016 payouts to our named executive officers were significantly less than the annual cash incentive payouts for 2015, reflecting strong pay-for-performance alignment.”
The compensation figure for Cook is not said to include the 1.26 million Apple shares given to him over the year – primarily as an award for five years of service as Chief Executive and valued at $135 million as at August 2016.
Apple, as well as other smartphone retailers, has been challenged by the increase in competitor brands on the market, especially as numerous advanced markets have now been penetrated at rate of 80% or higher. The iPhone, which accounted for 63% of yearly revenue for the company, was down against last year’s figures – selling somewhere in the region of 45 million units in 2016’s final quarter.
It has been harder to encourage consumers to opt for smartphone upgrades due to a lack of innovation in the market place and devices with a longer life. This reality, combined with a reduction in the numbers of people looking for their first smartphone, has seen the US and European markets’ get smaller.
Developing a presence in emerging markets such as China has helped Apple, although this move has its pressures, with competitor brand Samsung also in the market, as well as a series of Chinese brands. Both Apple and Samsung were lower in market share in 2016 (as reported from Gartner), with the third quarter seeing a reduction of 2.5% from last year, for Apple, with Samsung coming in at 4.4%. China’s local brands’ Huwaei, Oppo and others all saw a rise in their share of the market.
Photo credit: Mike Deerkoski