By Tripp Mickle
Apple Inc. rewarded Chief Executive Tim Cook and other top executives with a big boost in compensation for fiscal 2018, when the iPhone maker blew past annual sales and profit goals but faced slowing momentum for its most popular device.
Mr. Cook's total compensation for the year ended in September rose 22% to $15.7 million, according to a security filing Tuesday. It marked the second consecutive year his pay increased, and was driven by a $12 million cash bonus that hinged on Apple exceeding financial targets set by the board.
The award comes a week after Mr. Cook issued a letter to shareholders saying Apple would miss revenue estimates for the three months ended in December, marking the first time in more than 15 years the company had slashed its quarterly revenue guidance. Apple said a decline in iPhone sales, particularly in China, had hurt results.
Revenue soared to a record last year after Apple raised the price of its flagship iPhone by 50% to nearly $1,000. That move helped lift iPhone sales 18% to $166.7 billion, even as the number of devices it sold was flat with the prior year. It also delivered another year of strong growth in services such as app-store sales, streaming-music subscriptions and mobile payments, a business that jumped 24% to $37.19 billion.
Apple rode those gains to become in August the first U.S. public company to be valued at more than $1 trillion.
Revenue for fiscal 2018 totaled $265.6 billion, while operating income hit $70.9 billion, exceeding Apple's maximum targets of $264 billion for sales and $70 billion for operating income. Those targets represented about a 15% increase from the prior year's results.
The median annual pay of Apple employees was $55,426. That is far below the $240,430 at Facebook Inc. and $197,000 at Alphabet Inc. Like Amazon.com Inc., which reported median annual pay of roughly $30,000 because of its vast number of warehouse employees, Apple's median pay is suppressed by a huge workforce that staffs its retail stores.
Mr. Cook's pay of $15.7 million was about 283 times the median Apple employee's pay.
Apple scheduled its annual meeting for March 1 at its Cupertino, Calif., headquarters.
Though Apple reported record revenue and profit Nov. 1, its shares have tumbled more than 30% since, shedding more than $400 billion in market value, because of rising concern among investors about sales of its latest iPhones. Apple ceded its position as the world's most valuable publicly listed company, ending a nearly seven-year run.
Apple said in November it would stop reporting the number of iPhones sold, which many analysts interpreted as a signal the device's years of unit growth are over. Last week, Mr. Cook said revenue for the fiscal first quarter would come in around $84 billion, at least $5 billion shy of the company's previous guidance.
Mr. Cook and Apple finance chief Luca Maestri have encouraged investors to focus on Apple's services business, which has delivered three consecutive years of more than 20% sales growth. To further highlight that business, Apple will begin reporting gross margins separately for hardware and services.
Apple has 1.4 billion iPhones and other devices in active use and earns an estimated $30 for each device from services, according to Morgan Stanley. The firm expects services to account for about 60% of Apple's revenue gains over the next five years. By contrast, the iPhone accounted for 86% of sales growth in the previous five-year period, it estimates.
However, Wall Street's enthusiasm about services potential has cooled. Nomura Instinet analyst Jeff Kvaal said last month that the business was "not a panacea" for slowing iPhone sales because average revenue per user might slow as more buyers choose refurbished, less costly devices over newer, high-priced iPhones.
When Apple's sales last slumped in 2016, it took a bite out of the total compensation of Mr. Cook and the rest of the executive team. His compensation fell 15% -- all in reduced cash bonus -- as Apple failed to meet financial goals because of a decline that year in iPhone sales and a significant downturn in the company's China business.
For the latest year, Apple's other highest-paid executives received 10% increases in total compensation to about $26.5 million. Mr. Cook's annual compensation is lower than that of other Apple executives, though he received a large restricted stock grant in 2011.
Apple's board doesn't outline its goals for the current fiscal year in its annual proxy statement for shareholders.