RESOLVING THE LEDGER
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Another day, another dollar. But for John Ternus, who started Tuesday as Apple’s CEO , the amounts come with a lot more zeroes after them.
The Apple board handed the newly minted CEO of the $4.75 trillion iPhone maker a massive new compensation package to kickstart his tenure, with more to come if Apple’s pay history is any guide. Apple gave Ternus a salary bump to $3 million and granted him restricted stock units valued at $2.5 million, prorated for the few weeks he’ll serve as CEO before the end of Apple’s 2026 fiscal year. The board separately approved an annual equity award for fiscal 2027 with a target value of $55 million. Three quarters of the equity award will vest based on Apple’s total shareholder return relative to other S&P 500 companies. The rest will vest on a clock, 12.5% every six months over four years.
Tim Cook, who after 15 years as CEO is sticking around as executive chair while Ternus finds his footing, saw his salary decrease from $3 million to $2 million, effective later this month. The Apple board approved a $45 million target equity award for him, half in RSUs that vest over four years, and half that vest based on performance.
No word yet on an annual cash bonus for Ternus. Cook collected a $12 million bonus each of the past two fiscal years, according to Apple’s securities filings.
The Cook Precedent
It was an entirely different picture the last time Apple had a CEO change, when Cook succeeded the late Steve Jobs in 2011. Back then, Apple gave Cook 1 million RSUs with a grant date value of $376.2 million on top of a $900,000 salary that the board bumped to $1.4 million a few months after he took over the top spot. Half of the award vested five years after the award date, and the other half vested 10 years after the award date.
The Apple board’s decision at the time was “subjective” and not based on any peer group or formula. That was in part due to the circumstances: Jobs famously collected only $1 in salary, but held a colossal 5.5 million-share stake in Apple worth billions. The board said it determined Cook’s pay based on input from Jobs and the board’s assessment of Cook during his interim leadership periods during Jobs’ medical leaves. Jobs passed away in October 2011, following his Aug. 24 resignation that year.
Two years later, Cook asked the board to add some performance conditions to his award, meaning he would forfeit a portion if he didn’t achieve a stock-performance metric. The board carved out 800,000 share units from his 1 million award and divided it into 10 annual chunks of 80,000 shares apiece split half on performance. If Apple finished in the top third of the S&P 500 by shareholder return, all 80,000 units for that year vested. If they finished in the middle third, it cost him 20,000 and the bottom third cost him 40,000 shares.
Ternus’ award is now based on the same type of performance metric. A securities filing on Tuesday, required when an executive joins officer ranks, shows Ternus holds about 34,000 Apple shares in a trust, worth about $11.1 million at Tuesday’s stock price. He also holds seven grants of restricted stock from his years running hardware engineering, covering about 305,000 shares worth about $99 million or more, depending on how the shares pay out. Nearly half are performance units that could pay double or nothing, which puts the payout range between $50 million and $148 million.
This story was originally featured on Fortune.com
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