Here's Why Shareholders May Want To Be Cautious With Increasing Apple Inc.'s (NASDAQ:AAPL) CEO Pay Packet

Key Insights

• Apple will host its Annual General Meeting on 28th of February
• Total pay for CEO Tim Cook includes US$3.00m salary
• The overall pay is 458% above the industry average
• Apple's total shareholder return over the past three years was 48% while its EPS grew by 21% over the past three years

Under the guidance of CEO Tim Cook, Apple Inc. (NASDAQ:AAPL) has performed reasonably well recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 28th of February. However, some shareholders may still want to keep CEO compensation within reason.

Check out our latest analysis for Apple

Comparing Apple Inc.'s CEO Compensation With The Industry

At the time of writing, our data shows that Apple Inc. has a market capitalization of US$2.8t, and reported total annual CEO compensation of US$63m for the year to September 2023. Notably, that's a decrease of 36% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$3.0m.

On comparing similar companies in the American Tech industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$11m. Hence, we can conclude that Tim Cook is remunerated higher than the industry median. Furthermore, Tim Cook directly owns US$598m worth of shares in the company, implying that they are deeply invested in the company's success.

Talking in terms of the industry, salary represented approximately 14% of total compensation out of all the companies we analyzed, while other remuneration made up 86% of the pie. Apple has chosen to walk a path less trodden, opting to compensate its CEO with less of a traditional salary and more non-salary rewards over the last year. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Apple Inc.'s Growth Numbers

Over the past three years, Apple Inc. has seen its earnings per share (EPS) grow by 21% per year. In the last year, its revenue changed by just 0.5%.

Shareholders would be glad to know that the company has improved itself over the last few years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Apple Inc. Been A Good Investment?

Boasting a total shareholder return of 48% over three years, Apple Inc. has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

Apple prefers rewarding its CEO through non-salary benefits. Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. Still, not all shareholders might be in favor of a pay raise to the CEO, seeing that they are already being paid higher than the industry.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 2 warning signs for Apple that investors should look into moving forward.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.