Apple had a disappointing performance and missed its targets so top executives, including company CEO Tim Cook, made less money in 2016.
More specifically, as the company missed both its revenue and profit goals for the first time since at least 2009, Cook received $1.5 million less compensation for the year.
Since late CEO Steve Jobs left the company in Cook's hands, Apple has received a steady stream of criticism over not being innovative enough. Even so, Apple still managed to exceed its stretch goals year after year, up until now.
Apple In 2016: Missed Goals And Weak Performance
For the first time since Tim Cook took over as CEO, Apple's revenue and operating income missed both targeted and stretched goals for the year, the company reveals in a regulatory filing with the U.S. Securities and Exchange Commission (SEC).
Apple's iPhone was the most-wanted gift for the recently ended holiday season and Apple ranked top in holiday device activations, managing to surpass Samsung, but a good holiday season was not enough to turn things around and make up for the rest of the year.
Apple Executives' Pay Shrinks
With a weak overall performance and missed goals, Apple executives were not able to maximize the cash incentives included in their compensation packages. In past years when it reached its goals, Apple offered its executives the maximum total payout, maxing out the full potential cash incentives.
For 2016, the compensation was substantially lower, but that doesn't mean the executives walked out empty-handed.
Tim Cook got $8.75 million in total 2016 compensation, marking a $1.5 drop from the $10.3 million he received in 2015. Other executives were affected by the weak performance as well, receiving lower pay in 2016 than in 2015.
"Apple delivered another year of strong financial results in 2016. However, the two financial measures used to evaluate executive performance under our annual cash incentive program, net sales and operating income, declined from our record-breaking 2015 levels," Apple explains in its filing. "These results were below the target performance goals set by the Compensation Committee. As a result, the annual cash incentive payouts to our named executive officers were below target."
Apple's disappointing performance is no longer a surprise anymore. The company has been facing declining sales for a few quarters in a row now as its iPhone, iPad, and Mac performance got weaker. The iPhone still accounted for 63 percent of Apple's total revenue for 2016, but the sales' slump and sluggish growth in the market took a heavy toll nonetheless.
According to the filing, Cook's pay dropped 15 percent in 2016, as opposed to a 9.6 percent decline on average for the company's other top executives. Chief Financial Officer Luca Maestri, for instance, received $22.8 million for the year, of which $20 million were in stock awards, marking a 10 percent decline.
Lastly, Apple revealed that it made $215.6 billion in sales for the year, 3.7 percent lower than its target of $223.6 billion. Its operating income, meanwhile, stood at $60 billion, 0.5 percent lower than the $60.3 billion target.