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Why Tim Cook Did Not Top the CEO Pay List of 2011

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Contrary to what the media may have you believe, Tim Cook was far from the highest paid CEO of 2011. Of the $378 million the Associated Press purported he earned, including one million restricted stock units (RSUs), the Apple (APPL) CEO is falling than $377 million shy.  

Cook didn’t exactly settle for the famous $1 salary of his predecessor and other tech executives like Hewlett-Packard’s (HPQ) Meg Whitman and Google’s (GOOG) Larry Page, but he’s far closer on the earnings spectrum to that figure than what the Associated Press gleaned through its review of a securities filing.

While it’s true that Cook was awarded one million RSUs that were worth more than $376 million, they aren’t worth the paper they’re printed on until, at the earliest, 2016. That’s when the first half of them will vest. The second 500,000 will be endowed in 2021. Of course, since this is designed as a promotion and retention award, Cook won’t see a penny unless he remains at his post in at Apple.  

Fortune Tech writer Philip Elmer-DeWitt cites Apple’s proxy statement filed Monday to this effect:

"The RSU award is intended as a long-term retention incentive for Mr. Cook, and, accordingly, should be viewed as compensation over the 10-year vesting period and not solely as compensation for 2011."

How does this “whopper” of a $378 million pay package (says AP) translate into 2011 earnings for Cook? According to Elmer-DeWitt, Cook was paid a total of $916,537 -- the majority, $900,017, being his salary. Apple also gave him a 401(K) account contribution of $14,700 and paid life-insurance premiums worth $1,820.

This grand total makes Cook who, as COO until last August, helped grow Apple’s market value by more than $70 billion in 2011, arguably the most underpaid CEO in America.

Now, if we’re filing names in the overpaid column, we could easily start with Mark Hurd. Named by CNN Money as tech’s highest paid executive, one month after resigning in disgrace from Hewlett Packard, Hurd became president of Oracle (ORCL) with a starting base salary of nearly $700,000 and a $7.3 million cash bonus. Including stock and options, Hurd has landed the Big Mac of a pay package at $78.4 million.
POSITION:  No positions in stocks mentioned.