Apple chief executive Tim Cook has voluntarily taken a 40 percent pay cut for 2023, an unusual move that comes “in response to shareholder feedback,” according to the company’s annual proxy statement.
Jan Koors, senior managing director at Pearl Meyer, an executive compensation consultancy, said that if companies don’t pass the annual shareholder vote on compensation—which is called “say-on-pay”—with a number in the mid- to high 90s, “then you are out of step with expectations.”
“Passing by 60 percent or passing by 70 percent is almost like failing,” Koors said.
As companies and shareholders navigate decisions on executive pay, they’re confronting “competing forces” at the moment, according to Koors. Labor shortage concerns have deeply impacted retention in C-suites, but worries about income inequality are also an issue, particularly in the face of inflation that has outpaced wage gains for many workers.
“How do you explain a merit budget pool that’s 4.5 or 5 percent compared to 8 percent inflation,” Koors said, “when the named executive officers in proxy statements are making a lot of money and companies are reporting their highest-in-history profitability?”