Steve Jobs Compensation

http://www.futureofcapitalism.com/2011/01/steve-jobs-compensation

The Wall Street Journal has an article that appears under the headline "Apple's Jobs Grows Richer Despite $1 Salary." It reports, "Apple Inc. chief Steve Jobs again took an annual salary of $1 in 2010, representing his total compensation for the year, the technology giant said Friday in a regulatory filing." It goes on, "Mr. Jobs is widely known for taking the $1 salary, which has been his practice since rejoining the company as chief executive officer in 1997."

If you actually take a look at the 2011 Apple proxy statement, though, you'll see that, "In 2001, the Company entered into a Reimbursement Agreement with Mr. Jobs for the reimbursement of expenses incurred by Mr. Jobs in the operation of his private plane when used for the Company's business. The Company recognized a total of approximately $248,000, $4,000 and $871,000 in expenses pursuant to the Reimbursement Agreement during 2010, 2009 and 2008, respectively."

And the 2008 proxy statement makes clear that what the 2011 proxy statement refers to as "his private plane" was actually bought by the company and given to Mr. Jobs:

In 1999, the Company awarded Mr. Jobs an aircraft as an executive bonus in recognition of his outstanding performance during the previous two years. Mr. Jobs also received two stock option grants, one in 2000 and another in 2001. Mr. Jobs never exercised these grants, and they were both cancelled in March 2003, when the Company awarded Mr. Jobs a grant of 5 million shares of restricted stock.

The 2003 restricted stock grant required Mr. Jobs to remain employed by the Company for three more years before it vested. This grant, which increased to 10 million shares when the Company's stock split in 2005, vested in full in March 2006. After a portion of these shares was withheld for the payment of taxes, Mr. Jobs received the remaining 5,426,447 shares. Due in large part to Mr. Jobs's leadership, the Company's stock price (after accounting for the stock split) increased from $7.47 on the March 2003 grant date to $64.66 on the March 2006 vesting date—more than an eight−fold increase in three years. Under Mr. Jobs's continued leadership, the Company's stock price increased from $64.66 per share in March 2006 to $189.95 per share as of October 31, 2007—a three−fold increase in approximately 18 months.

When he was elected to the Board in 1997, Mr. Jobs received the standard director's stock option grant for 30,000 shares. Because Mr. Jobs became employed later that year as the Company's interim CEO, he was no longer eligible for such director grants. When the 1997 director grant (which increased to 120,000 shares after two stock splits) was due to expire in August 2007, Mr. Jobs exercised the option and he currently holds these 120,000 shares.

In the 2004 proxy statement, Apple disclosed a restricted stock award to Mr. Jobs that it valued at $74,750,000. It also explained:

In December 1999, Mr. Jobs was given a special executive bonus for past services as the Company's interim Chief Executive Officer, in the form of an aircraft with a total cost to the Company of approximately $90,000,000. Because the aircraft was transferred to Mr. Jobs in 2001, the amount of approximately $43.5 million paid by the Company during fiscal year 2001 towards the purchase of the plane and the related tax assistance of approximately $40.5 million was reported as income to Mr. Jobs. In fiscal 2002, approximately $2.27 million paid by the Company towards the purchase of the plane and approximately $1.3 million in related tax assistance was reported as income to Mr. Jobs.

In other words, Apple gave Mr. Jobs $74.75 million worth of stock and a $90 million airplane, plus at least $41.8 million in "tax assistance" to Mr. Jobs for the airplane. And the Wall Street Journal headline and news article tell readers about the fact that he's taken $1 a year in salary since 1997. The Journal story acknowledges that Mr. Jobs "owns about 5.5 million shares of the company," but doesn't say anything about how he received them.

Look, even at those compensation levels, Mr. Jobs may be a bargain — Apple has done very well. But to make the guy into a hero for taking $1 a year in salary since 1997 when he's also received all that other compensation not mentioned in the Journal article but mentioned here and in the old proxy statements is more than a little misleading.

by Ira Stoll  |  Jan 9, 2011 at 3:43 pm Related Topics:  Compensation, Taxes receive the latest by email: subscribe to the free futureofcapitalism.com mailing list