Maybe Apple CEO Tim Cook will Never Retire.
His decision will come by choice, not out of necessity.
The big news of the last week: Cook asked for and received a 40% pay cut.
Here’s a breakdown on how incredibly well Cook did last year, via CNBC:
In 2022, Cook made just under $83 million in stock awards, $12 million in incentives and $3 million in salary. He also got benefits including retirement plan contributions, security, personal air travel and more than $46,000 in vacation cash-out.
Two things stick out.
One, as big tech (e.g., Microsoft, Google, Amazon) participates in layoffs that have been taking place for several months now at smaller companies, Cook is receiving praise for taking a pay cut rather than firing people.
While Apple pays Cook a vast majority of his compensation via stock options, the move still matters. It will allow Apple to either use the room Cook’s move leaves to spread stock awards across new hires or to existing employees or reduce the stock-based compensation program, which doesn’t directly save Apple money, but might reduce the dilution of the ownership of existing shareholders.
Complicated stuff. Any way it works out, it’s a nice gesture.
Two, Tim Cook has a retirement plan!
At first, I was like, wait what!?, Apple’s matching Tim Cook’s 401(k) contributions?
Knowing there had to be more to retirement plan than meets the common person’s eye, I dug into the SEC filing detailing the particulars of Cook’s compensation.
After we look at an image I took recently of the indoor/outdoor Apple Store in Downtown San Francisco, across from Union Square, I excerpt the salient part.
The Compensation Committee approved a retirement vesting provision in Mr. Cook’s RSU award agreements to recognize the unique impact of his leadership decisions on the long-term growth and success of Apple. The RSU award agreements for Mr. Cook’s RSUs granted in 2021, 2022, and 2023 include the retirement vesting provision which applies if he terminates employment due to retirement on or after the first anniversary of the applicable equity award grant date. Retirement is defined as a termination of employment after reaching at least 60 years of age and at least 10 years of service with Apple. Mr. Cook now meets the age and service requirements.
Unless otherwise determined by the Compensation Committee, Mr. Cook’s 2021 and 2022 time-based RSU award agreements provide for accelerated vesting of any unvested time-based RSUs in full upon a termination of employment due to death, and a continued right to receive the full number of unvested shares underlying the time-based RSUs on the original vesting dates upon a termination of employment due to disability or retirement if retirement occurs on or after the first anniversary of the grant date.
So, in the shell of a nut, with some limitations, Cook’s unvested options come to when he decides to retire.
For the record, if you do invest in stocks, use SEC filings. Even if you don’t invest, reading the documents public companies make public—by law—tends to deliver interesting, if not useful information that doesn’t always end up in the mainstream press.
Once the busy months of February and March pass, we’ll do a series on investing, which will include utilizing SEC filings.
Anyhow, my knee jerk reaction before I found out what retirement plan means in conjunction with Tim Cook was—why does he need a retirement plan?
I know you play this game. My girlfriend and I do.
What would you do if you fell into millions upon millions, if not billions of dollars?
I’d keep it incredibly simple.
I’d go to this newsletter post—
First, I would consider this money not my money, but our money. My partner and I.
While she might take a different approach than me, I feel like we’re in the same ballpark and could easily iron out any differences.
For me—
I would double our total cost of living, then set aside enough to cover 50-60 years. Total being everything we spend in a typical month on all needs, wants, additional discretionary spending, taxes, savings, everything. I’d round up, then round up again.
We’re talking roughly $6 million. This is what we’d need to live and well to 100 years old.
We wouldn’t have a house payment because we’d buy a place in Los Angeles. Then, my girlfriend and I would each pick a city and buy a nice, but small apartment in the heart of each place. This might set us back another $6 million or so. What we would not have as a housing payment would go to service tax, insurance, and maintenance on these properties.
Then we’d set another $5 million aside for just in case, spread across a mix of relatively conservative, income-generating investments. Yielding just 2% on $5,000,000 generates $100,000 a year. We could live off of that or reinvest it.
We’d set another $1-2 million aside for travel.
We’d take care of our daughters and other family members—within reason.
We’d thoughtfully and methodically give the rest away.
We’d try to remain anonymous. So you guys would have to keep a secret. As an incentive, maybe I’d pay you every month to subscribe to this newsletter, closing it to new subscribers. It would be our own private club.
We’re not there and probably never will be, so—
You have no idea how you’d act and react until you’re in the situation. But that’s what I think I’d do.
Having endless amounts of money could feel like a burden. Given the choice between endless amounts of money and a couple to a few million to set myself and my partner up for life, I’d likely go with the latter.
Because—how much money do you need?
I can't say I disagree with any of what you are saying. I suspect I would find it very hard to have billions of dollars and to just sit there watching it grow and grow. Don't get me wrong -- would be happy to be financially rich (though I'm glad I didn't grow up that way) -- but having that much money would just feel immoral to me.
Which is one of the reasons I love Dolly Parton. I read a while ago that she would be a billionaire several times over, but isn't because she's given so much away.