Tim Cook is set to receive a huge bonus thanks to the iPhone 8, which hasn’t even been released to the market yet.
Apple’s forthcoming phone, however, has already created much buzz which has brought in tremendous financial benefits to the company’s CEO. Cook is set to receive a bonus of a whopping $90 million based on the hype created by the product. The iPhone8 is said to be the next generation smartphone and has sent Apple stocks sky rocketing to 39.5%. This spike has increased the stock value of the company to $1 trillion.
According to the terms of the contract, Cook will receive a large portion of the stocks, also termed as restricted stock units, annually. Previously, there was serious doubt as to whether Cook would receive such a bonus this year, considering the company’s performance to date. But with this rise in stock price, Cook can breathe a sigh of relief. Per the contract, half of the award depends upon the performance of Apple in the stock market’s S&P 500 Index SPX. Looking at the results of Apple earlier this year, the company was flagging at the bottom of the table, way below companies like Campbell’s Soup & Co. Had the bonus value been calculated based on that performance, Cook would be receiving only half of what he is to get now.
Even though there is hype around the product doing well, only time will tell how successful the iPhone 8 actually proves to be.
Analyst Paul Dorf of Compensation Resources, Inc. called the bonus a “gigantic award.” Even if most companies are reluctant to give such contracts, Apple can do it because of the sheer size of the company.
Of course, if the company does well in the stock market, the stockholders never complain. When Cook first introduced this performance-based component to his own rewards, he indicated that the money he will make will be donated to philanthropic causes. So far, he has done a commendable job.