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Why is Apple Cutting Tim Cook’s Pay?

Apple Inc.’s extended stoop in iPhone gross sales final yr took a chunk out of Chief Government Tim Prepare dinner’s complete compensation, which fell for the primary time since he assumed management of the corporate in 2011.

The corporate acknowledged in a regulatory submitting Friday that it fell in need of its personal annual efficiency targets for income and income, the primary time that has occurred since Apple started publicly disclosing these objectives beginning with its 2009 fiscal yr.

Apple mentioned its annual gross sales of $215.6 billion have been three.7% beneath goal, and its working revenue of $60 billion got here up zero.5% brief, for the fiscal yr ended Sept. 24. The corporate posted its first annual income decline in 15 years as gross sales volumes of the iPhone declined for the primary time because it was launched in 2007.

On account of the shortfall of Apple’s personal projections, Mr. Prepare dinner’s complete 2016 compensation fell 15% to $eight.75 million from $10.three million within the yr earlier. The decline was tied to his money bonus, which hinged on exceeding income and revenue targets set by the board. His base wage really rose 50% to $three million.

Mr. Prepare dinner’s complete compensation does not embrace the mega-stock grant he obtained in 2011 when he took over as CEO, an award valued on the time at some $376 million.

Apple’s 5 most-senior executives every noticed their complete compensation fall throughout the newest fiscal yr, in accordance with Friday’s submitting. Each earned about $22.eight million, round 9% beneath their 2015 compensation of $25 million. Their compensation for fiscal 2016 included $2.eight million in wage and $20 million in shares of restricted inventory for every.

Wall Avenue anticipated Apple to earn $9.50 a share in fiscal 2016, mentioned Cowen & Co. analyst Timothy Arcuri. The corporate fell 12% in need of expectations, incomes $eight.35 per share.

Apple’s outcomes mirror disappointing gross sales of the iPhone 6s, which was launched in late 2015. In a name with analysts in July after the fiscal third quarter, Mr. Prepare dinner acknowledged that the variety of clients who upgraded to the iPhone 6s fell in need of Apple’s expectations.

The iPhone 6s confronted tough comparisons with its predecessor, the iPhone 6, which benefited from being the corporate’s first new system obtainable with operator China Cellular, Mr. Arcuri mentioned. China Cellular has about 700 million subscribers.

Apple discloses quarterly steerage to traders and analysts, and met these objectives in every interval final fiscal yr, nevertheless it does not reveal an annual goal.

Apple’s outcomes this yr will rely on the success of the iPhone 7 and seven Plus, which have been launched in September final yr. In a name with analysts in October, Mr. Prepare dinner mentioned demand was outpacing provide, as options like new cameras and longer battery life made them the “greatest iPhones [Apple] ever made.”

On Jan. 31, the corporate will report outcomes for its most up-to-date quarter, ended Dec. 31. In October, Apple projected income of $76 billion to $78 billion for the interval, which might be a rise from the $75.9 billion it delivered in the identical interval a yr earlier.

Later in 2017, analysts count on Apple to profit from the introduction within the fall of a 10th-anniversary iPhone. Mr. Arcuri expects the telephone to incorporate wi-fi charging and to return in three sizes, making it “arguably essentially the most revolutionary and completely different trying telephone in years,” he mentioned.

Mr. Prepare dinner’s annual compensation is decrease than that of different Apple executives, however that quantity is considerably deceptive due to the massive restricted-stock grant he obtained in 2011. Final August, 1.26 million shares of the inventory vested and have been valued at about $135 million. Mr. Prepare dinner bought $36 million in shares and forfeited one other $71 million to cowl taxes, in accordance with a submitting in August.

Mr. Prepare dinner has an extra three.5 million shares that have not vested with a price of about $413 million, based mostly on Friday’s share worth. About 560,000 shares will vest every year between now and 2021, and the 700,000 remaining shares will vest in 2021.

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