Tim Cook: CEOs garner discussion by announcing pay cut, is pay really cut?

Be it Team Cook or Sundar Pichai or CEO of any other company. Apart from the CTC component of any CEO’s salary, there are many other factors on which their worth is determined.

Apple, known as the world’s most valuable company, has announced a 40 percent pay cut for its CEO. The special thing here is that this discount was announced by Tim Cook himself. From this announcement, you must be thinking that if Tim Cook was bringing home 1 crore rupees as salary, now he can bring home only 60 lakh rupees, then you should understand the maths of CEO salaries.

Tim Cook’s salary calculation

  1. Be it Team Cook or Sundar Pichai or CEO of any other company. Apart from the CTC component of any CEO’s salary, there are many other factors on which their worth is determined.
  2. If we talk about Tim Cook, to understand Tim Cook salary, company performance and market cap need to be understood. According to the report of Bloomberg, Tim Cook will receive 49 million dollars (about four billion rupees) this year.
  3. Cook received $9.94 billion last year i.e. 2022. This includes $3 million in base salary, $83 million in stock awards and bonuses. Before that, in 2021, he received a total salary package of $9.87 million.
  4. Now after the new announcement, Tim Cook’s stake in the existing stock units has increased from 50 percent to 75 percent.
  5. In fact, while Apple shares fell 22 percent last year, Apple shares are up nearly 22 percent so far this year. So why Tim Cook had to make such an announcement in such a situation.

This is how CEO salaries are determined

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  1. CEO’s role is the most important in the company, so his salary calculation is also different. CEOs’ pay depends largely on the company’s performance.
  2. Apart from CTC, CEO’s salary also includes stock award, stock award is the amount that depends on the shares of the company.
  3. Risk and reward principals are used in CEO pay. Most companies pay for performance under compensation plans.
  4. Cash Base Salary – In most companies, this portion is higher in the CEO’s salary when the incentive depends on efficient management.
  5. Bonus – The bonus portion of the CEO’s salary is also linked to the company’s performance so that the CEO can take the company to new heights.
  6. Stock Options – In addition to the CEO’s salary, stock options are held so that the CEO can quickly achieve short-term goals.

After understanding this calculation, Tim Cook’s announcement came. In fact, how much less Tim Cook’s salary will come from this announcement will all depend on Apple’s performance, although Tim Cook, looking at old figures, has already announced that he is cutting part of his salary under the backup plan.

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