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Is Apple Inc. (NASDAQ:AAPL) Excessively Paying Its CEO?

Simply Wall St

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Tim Cook became the CEO of Apple Inc. (NASDAQ:AAPL) in 2011. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for Apple

How Does Tim Cook's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Apple Inc. has a market cap of US$893b, and is paying total annual CEO compensation of US$16m. (This is based on the year to September 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$3.0m. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO total compensation was US$11m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.

It would therefore appear that Apple Inc. pays Tim Cook more than the median CEO remuneration at large companies, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see a visual representation of the CEO compensation at Apple, below.

NasdaqGS:AAPL CEO Compensation, June 13th 2019

Is Apple Inc. Growing?

Over the last three years Apple Inc. has grown its earnings per share (EPS) by an average of 14% per year (using a line of best fit). Its revenue is up 4.5% over last year.

This demonstrates that the company has been improving recently. A good result. It's nice to see a little revenue growth, as this is consistent with healthy business conditions. You might want to check this free visual report on analyst forecasts for future earnings.

Has Apple Inc. Been A Good Investment?

Most shareholders would probably be pleased with Apple Inc. for providing a total return of 110% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

We compared the total CEO remuneration paid by Apple Inc., and compared it to remuneration at a group of other large companies. We found that it pays well over the median amount paid in the benchmark group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. In addition, shareholders have done well over the same time period. So, considering this good performance, the CEO compensation may be quite appropriate. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Apple.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.