Apple is one of the biggest brands in the world. And it’s no secret that the brand’s intuitive tech inspires an almost religious-fervor amongst its loyalists. Well, Apple CEO Tim Cook might have just kicked it up a notch with his decision to forgo almost 40% of his compensation. At a time when tech companies have laid off over 200,000 people since last year, the Apple brand has just set a new precedent.
Big tech has been reeling under grim forecasts and an economic downturn that shows no sign of relenting. Tech giants like Google, Microsoft, Meta, Tesla, and Amazon have initiated layoffs, while Apple has been conspicuously silent. This has not gone unnoticed by experts or Apple fans, who attribute it to the brand’s foresight in hiring and the CEO’s willingness to listen to stakeholders.
Most tech giants indulged in over hiring during the pandemic and are now scrambling to find a way to cut costs. It does not help matters that rising inflation and geopolitical tensions have terrified even the most optimistic investor.
So, why is it that Apple CEO Tim Cook decided to take a pay cut? Did he want to cut costs or save the Apple brand from conducting layoffs? How has Cook’s decision impacted the tech company and its future?
If you’re looking for answers to the above questions, come with us as we delve into the operations of one of the biggest tech companies in the world.
Tim Cook takes a pay cut
Apple CEO Tim Cook’s compensation in 2022 amounted to over $90 million. The chief executive made $83 million in stock awards, $12 million in incentives, and $3 million in salary. Other perks include retirement benefits, security, travel, and $46,000 in vacation cash-out, amounting to over $1 million.
But following a request by the man himself for a pay cut, Cook’s 2023 target compensation has been set at $49 million.
According to a filing with the SEC, the decision to cut the CEO’s pay came after Apple shareholders expressed “concern over the amount of Mr Cook’s total target compensation due to the size of his 2021 and 2022 equity award.”
In 2023, Cook will earn a base salary of $3 million, $6 million in cash incentives, and $40 million in equity awards. The 40% pay cut will affect his equity awards, and his 2023 salary will be heavily tied to the tech giant’s stock performance.
When Apple shareholders expressed their displeasure at the Apple boss’s remuneration, he willingly asked for a cut despite 64.4% voting in support of the recommended pay package.
During Cook’s tenure, Apple’s net profits have grown over 3.7 times from US $26 billion to $95 billion. He is also well-known for increasing operational efficiencies and being a democratic leader.
Apple Hirings
It is a well-known fact that the Cook relies on teamwork and transparency to keep the Apple brand relevant and efficient.
When other companies hired tens of thousands of workers during the pandemic, Apple cautiously added a few thousands to its headcount. It is reported that the iPhone-maker recruited less than 7,000 people in 2020. Its peers Google (21,000), Microsoft (58,000), and Meta (13,000), continued hiring recklessly between 2020 and 2022.
The Cupertino-based firm has always followed a lean recruitment process. Keeping operational requirements in mind, the company only hires people where their role directly contributes to the growth of the firm. This helps avoid excessive hiring, and eventual layoffs.
As of 2022, Apple’s total employee count stood at 164,000 worldwide, a 6.49% increase from 2021.
Apple’s judicious hiring has been much appreciated by its employees and fans, as the company’s foresight has helped avoid some much-dreaded layoffs.
Tech layoffs
Big firms have continued to announce tech layoffs starting from 2022. Google parent, Alphabet, recently announced that it will layoff almost 6% of its workforce, reducing headcount by almost 12,000. Amazon has decided to focus on cost-cutting and reduced its people by 18,000.
Meta announced last year that it will be eliminating 11,000 jobs while Microsoft has reduced their overhead by 10,000.
Meanwhile, Tesla has paused hiring in the first quarter of 2023 and revealed in December that it will be conducting additional layoffs. The Tesla layoffs were first initiated in June 2022 after CEO Elon Musk stated that he had “a super bad feeling about the economy.”
The tech giants have also faced increased pressure from stakeholders after reporting less-than –stellar growth forecasts that seem to whisper of an impending recession.
The Apple Brand
Amidst all this chaos, the Apple brand has emerged pretty unscathed due to its thoughtful hiring decisions and willingness to listen to its stakeholders.
Despite taking full responsibility for overhiring, neither Alphabet CEO Sundar Pichai nor Meta CEO Mark Zuckerberg took a hit on their overall remuneration. Most American believe that CEOs are overpaid.
In 2022, CEO pay rises easily beat inflation as boards awarded the top bosses eye-watering sums while the average worker struggled to make ends meet.
So far, Apple has only laid off people when Steve Jobs returned to the helm in 1997, over 20 years ago.
This does mean that the company has had it easy. The iPhone-maker has been plagued by supply chain issues as a result of US sanctions on China. In the last one year, it also lost $846 billion of its market cap.
Although some analysts believe that the company might eventually have to conduct layoffs, for now the company appears to be holding steady.
During such a time, the Apple brand is sure to benefit from its CEO willingly taking a pay cut and managing to hold off on the layoffs. Its long-term growth plans and sensible hiring practices have managed to earn the Apple brand some goodwill despite not doing anything in a tough economy.
