Tim Cook May Head Up the World’s Most Valuable Company, But He’s Not Even Close to Being the Highest Paid CEO

It may surprise you to find out that even though Apple is the most valuable company in the world, its Chief Executive Officer, Tim Cook, doesn’t rank even close to the top of the list of the 500 best-paid CEOs.

Don’t get us wrong, Tim Cook still makes far more money than most of us will ever see in a lifetime, but when it comes to CEOs of the top 500 companies, Apple’s chief is actually in 171st place.

This latest data comes from the Wall Street Journal’s annual ranking of pay and other compensation for those at the helm of the S&P 500 (Apple News+ link), and while Cook is still slightly above the median pay, it’s not by much.

Specifically, the WSJ reported that median pay reached a new record of $13.4 million, continuing the upward streak it’s been on over the past five years, while Cook’s total package for 2020 was worth $14,769,259.

This paled in comparison to those in the top ten, however, which led in with Chad Richison of Paycom Software at over $211 million, followed by others such as Activision Blizzard’s Robert Kotick ($154.6 million) and General Electric’s Larry Culp ($73.4 million).

To be fair, most of these compensation packages aren’t in the form of raw cash, but rather stock options, and those stock options are often tied to performance. For example, Paycom told the WSJ that Mr. Richison’s $211 million package requires that “the company must make significant market and operational gains” to achieve the full value, and this kind of payoff is also made on a five-year cycle.

Similarly, Activision Blizzard’s lead independent director, Robert Morgado, told the WSJ that Mr. Kotick’s package of over $150 million was earned over a four-year period, rather than in a single year. Morgado was also quick to point out that this is intended to reflect “more than 30 years of creating value for shareholders.”

Still, Tim Cook’s earnings start to seem pretty paltry when compared to numbers like those, especially considering that he has also spent nearly a decade in creating significantly more value for shareholders, leading Apple not only past the $1 trillion threshold nearly three years ago, but beyond that to a $2 trillion valuation only two years later.

In fact, it’s worth noting that while shareholders saw a one-year return in 2020 of 109 percent, based on the increase in the price of Apple shares and dividends paid out during that year, Cook’s compensation increased by a mere 28 percent.

There were actually quite a few well-known companies that had CEOs who earned considerably more than Tim Cook:

• Adobe’s Shantanu Narayan, in eighth place at $45.8 million
• Netflix’s Reed Hastings, in ninth place at $43.2 million
• Netflix’s Ted A. Sarandos, in tenth place at $39.3 million
• Steve Mollenkopf, Apple’s erstwhile enemy in the chip business, was in 33rd place at $25.9 million
• Facebook’s Mark Zuckerberg came in 38th at $25.3 million
• David M. Solomon of Apple Card partner Goldman Sachs in 45th place at $23.9 million.
• Verizon CEO Hans Vestberg, who took the stage at Apple’s iPhone 12 launch event, ranked in 98th place at $19 million.
  

Others include most of the big banks and other financial players like Mastercard, Visa, American Express, Capital One, JPMorgan Chase, Morgan Stanley, and Bank of America, along with big pharmaceutical companies like Pfizer and Eli Lilly, and other household company names like General Motors, Walmart, AT&T, Hershey, Walgreens, and Coca-Cola.

While Tim Cook landed right in the centre, what’s perhaps a bit more surprising is how many big tech CEOs landed at the bottom due to their more unusual compensation packages. For example, Tesla’s Elon Musk took away $0 last year, while Twitter’s Jack Dorsey collected an annual salary of $1.

Amazon’s Jeff Bezos and Alphabet/Google’s Sundar Pichai were also on the bottom end of the scale, at $1.7 million and $7.4 million, respectively.

All of this having been said, it’s important to keep in mind that these numbers merely reflect the amount of compensation each CEO received last year, and has nothing to do with their actual net worth. Further, the compensation packages for many CEOs vary greatly year-over-year. For example, while Elon Musk took no money out of Tesla last year, he received stock options worth $32 billion back in 2018, making any annual compensation on top of that pretty much irrelevant.

Similarly, Berkshire Hathaway’s Warren Buffet only received compensation of $380,328, a number that’s absolutely meaningless compared to the pile of money he’s already sitting on — Buffet is already the seventh-wealthiest person in the world, with a current net worth of $109.5 billion. By contrast, Tim Cook only recently joined the Billionaire Boys club, with a net worth now estimated to be around $1.3 billion, most of which is vested in Apple stock.