Apple Inc. (NASDAQ:MSFT) has been seeing impressive sales for past several years, but for the first time last year, it saw its sales slump. This led the firm penalize its CEO, whose pay has been cut by 15%. The compensation package awarded to Tim Cook last fiscal year that ended September 24th 2016 was valued at $8.7m. It was less than what he was paid in the prior year i.e. $10.3m, says a report from BI.
Cook penalized for iPhone sales
On Friday, the California-based firm filed regulatory documents, citing downturns in its revenue and operating profit as the main reason for cutting the salary of Cook and other top executives. A year over year decline of 8% was seen in Apple’s revenue while the operating profit declined by 16%.
Apple missed both the targets for 2016 i.e. internal revenue and operating income by 3.7% and 0.5%, respectively. Fewer iPhone sales (first time since the device came out in 2007) were the main cause for the drop. The US firm is expecting a rebound during this holiday season.
In case, the firm had not missed these targets and managed to meet or exceed those, Cook could have expected his 2015 compensation of $10.3m to serve as a floor for 2016. Instead, his compensation package has been reduced to $8.75m. From a relative point of view, this drop is more severe than Apple’s actual miss, notes TechCrunch.
The other Apple Inc. (NASDAQ:MSFT) executives too saw a drop in compensation, but it was slightly more modest at 9%. However, he did get a 50% increase in his base salary that went up to $3m. Not to forget, he has a large stock holdings.
Will Apple make a rebound?
Apple has never missed its internal targets since 2009, so this is really depressing. Apple’s growth has been cyclical to a certain extent. But every time a question is raised on Apple’s value, it never failed to deliver and prove its worth. Last year, was neither a failure nor success, and therefore, it is an obvious question, if the firm can or cannot rebound.
Many believe that the 10th anniversary iPhone will be a make or break product for Apple Inc. (NASDAQ:MSFT). But, there are others who believe that the Apple’s growing services business will serve as a potential growth driver. Apple’s R&D team is highly secretive, and hasn’t given any information about its future plans.
It can only be speculated that the firm is working on a game-changing VR or AR device or even a self-driving car. Now, all eyes will be on Apple’s next earnings report. Later this month, on January 31st, Apple will report its Q1 results.
No hostile investor reaction in particular is seen on Apple’s stock to the news of Cook’s compensation cut. On Friday, Apple shares closed up 1.11% at $117.91.