SAN FRANCISCO – US tech giant Apple has penalized CEO Tim Cook for the iPhone maker’s first sales slump in 15 years with a 15 per cent pay cut.
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Although Apple ended 2016 with $215.6 billion in sales, it wasn’t enough to hit the revenue and profit goal for the year – and CEO Tim Cook and the rest of the iPhone maker’s executives are paying for it.
A regulatory filing, first reported by The Wall Street Journal, reveals Cook received $1.53 million less in 2016 than the previous year, as his incentive pay dropped from $10.3 million to $8.75 million. However, other executives saw a $2.21 million drop in this area from the previous year.
The Cupertino, California, company cited a downturn in Apple’s revenue and operating profit as the main reason it cut the pay of Cook and its other top executives.
Apple’s annual sales were 3.7 percent below its target of $223.6 billion, and its operating income of $60 billion was 0.5% short of the $60.3 billion target. That was mainly because it sold fewer iPhones for the first time since the device came out in 2007.
It also marked the first time that Apple’s annual revenue decreased since 2001, which was just before the company’s late co-founder and CEO Steve Jobs unveiled the iPod. That digital music player set the stage for the iPhone and iPad.
The iPhone triggered a revolution in mobile computing and became Apple’s biggest moneymaker, even as a wide range of device makers released competing products primarily running on Google’s free Android software. Most of the world’s smartphones are powered by Android, but the iPhone remains a popular high-priced status symbol.
Even so, consumers are holding on to their existing iPhones for longer periods instead of upgrading to a newer model every year or two. That has raised investor concerns that Apple has become too dependent on the iPhone, a nagging worry that has been aggravated by the company’s inability to introduce another breakthrough product since Jobs’ death in 2011.
Cook, Jobs’ anointed successor, had hoped Apple would have another huge hit with a smartwatch unveiled in 2014, but that device has only had moderate success.
Tim Cook joined Apple in March 1998 as senior vice president of worldwide operations and then served as Executive Vice President of worldwide sales and operations. He was made Chief Executive on August 24, 2011.
During his tenure as the Chief Executive he has advocated for the political reformation of international and domestic surveillance, cybersecurity, corporate taxation both nationally and abroad, American manufacturing, and environmental preservation.
In 2014, Cook became the first Chief Executive of a Fortune 500 company to publicly identify as gay. He also serves on the boards of directors of Nike, Inc. and the National Football Foundation.