The ups and downs of performance-related pay

Being remunerated based on your company’s profits comes with big rewards, and also big risks as Apple boss Tim Cook has just discovered.

The loss of US$4 million in your annual income is a tough pill to swallow, even when you are the chief of one of the world’s most valuable and high-profile companies.

Apple’s CEO Tim Cook saw his annual pay decline to US$11.6 million in 2019 after the tech giant registered a weaker financial performance compared with the previous year. Cook took home US$15.7 million in 2018 – a combination of base salary (US$3 million) a bonus and various benefits.

Among US$885,000 worth of benefits was the use of a private jet ‘’for security and efficiency reasons’’. Cook also saw more than US$113 million worth of Apple shares become vested as part of his long-term compensation package.

As iPhone sales have weakened, Apple has been shifting towards becoming a services provider. This could see it offer a subscription-based model for its popular phones. Apple already offers apps, insurance, storage, paid services along with paid-for content.

The company’s latest results showed small decline in revenue from its flagship iPhone product. Apple reported net sales of US$260.2 billion and operating income of US$63.9 billion for 2019.