How Apple calculates Tim Cook’s salary

Tim Cook took home a cool $4.2 million this year, according to a regulatory filing Apple submitted to the Securities and Exchange Commission on Thursday.

Compared to the $1 annual salary Steve Jobs used to make, Cook would seem to be doing pretty well for himself. But Apple claims Cook is woefully underpaid.

Cook’s annual salary was boosted to $1.4 million this past year, and he earned all of his eligible cash bonus — 200% of his salary, or $2.8 million. When determining Cook’s pay, Apple said it considered its “financial results,  Mr. Cook’s responsibilities as CEO,” and the amount he makes compared to “CEOs at peer companies.”

Who are those peer companies? A few of the direct competitors you’d expect (Amazon, Google, Microsoft, Dell, and Hewlett-Packard), some giant tech companies (Oracle, Cisco, Intel and IBM), Apple’s wireless partners (AT&T, Verizon, and Qualcomm), and a bunch of media giants (Comcast, DirecTV, News Corp. Disney, and CNNMoney parent company Time Warner). 

In calculating Cook’s salary, Apple included more media companies in its comparison this year, adding DirecTV and Viacom, and tossing out Texas Instruments. Is Apple TV on its way? Hmmm…

Despite giving Cook a 50% raise, from $900,000 in 2011, Apple noted that its CEO’s pay “remains significantly below the median annual cash compensation level for CEOs at peer companies.”

Don’t feel too bad for Tim, though. Last year, Cook received a pay package — filled with incentives that vest in 2016 and 2021 — currently worth more than $500 million.