There are several big-name executives to discuss at Apple, Inc., however, I will focus on Tim Cook
(the CEO) and Luca Maestri (the CFO). Tim Cook, in 2021, earned a total of $98,734,394 – of which
only $3,000,000 was paid as salary while the rest was split between a bonus ($12 million) and
stock ($82.3 million). For Luca Maestri, we see much lower, but still astronomical values. Luca
Maestri, in 2021, earned $26,978,503 total – of which, only $1,000,000 is paid as salary while the
rest is split between a bonus ($4 million) and stock ($22 million). To compare these salaries to a
more average employee, I took several different jobs salary values and averaged them – a design
engineer who earns $150k, a hardware engineer who earns $168k, a technical specialist who earns
$30k, and an operations analyst who earns $87k. The average salary as computed was $108,750.
Given this average, the CEO (Tim Cook) earns roughly 28 times more than the average salary of
the average employee. Given the average, the CFO (Luca Maestri) earns roughly 9 times more
than the average salary of the average employee. I think given how successful Apple, Inc. is and
how hard the executives work together, they are worth what they are paid. However, I think the
employees under them, those who earn the more average salary ranges, are worth more than
their being paid, and should be paid more.
Choosing to compensate an executive with stock in addition to salary options is a great way to
keep your executives invested in the success of the company they are running – which is in large
part why I believe Apple, Inc. invests so much into stock for each of their executives. I think the
benefit of a guaranteed fully-invested executive who will work hard to ensure financial success
makes issuing stock worth it for Apple, Inc.
Lastly, I think careful review of payroll registers against what was paid to the executives is due
each reporting period. Additionally, bonus information must be reviewed. Finally, a full internal
audit of stock issued should be done to ensure extra stock is not being issued to executives when
it is not supposed to. How much stock is issued to them should be calculated out somewhere so
we can be sure that the correct amount is being reported and issued.
The company I have chosen to investigate for compensation ratios is Microsoft. The CEO of the
company is Satya Nadella, who has made $49,858,280 in total for compensation. This amount
exists from $2,500,000 received as salary pay, $14,212,500 in bonus pay, $33,036,030 awarded as
stock, $0 received in stock options, and $109,750 from other compensation (Salary.com, 2018).
For employees of Microsoft the average salary is about $123,000 with an average bonus of about
$14,000. The ratio of employee salary to CEO salary is 21 to 1, which means the salary of 21
employees would be equal to the salary of the individual CEO (Average Microsoft Corp Salary |
PayScale, 2019). In my opinion I believe that in most cases executive compensation is worth it
because that singular person has more obligations and duties than most employees and oversees
most of the company.
It is a good idea to compensate executives with stock or stock options because it gives the
company the chance to create shareholders with their own employees. This is beneficial for the
company because the executive will always do what is in the company's best interest to make sure
their share is doing well. The most useful auditing procedures to identify fraud would be to learn
and understand the company and its internal controls, perform any analytical procedures needed,
and analyse all financial statements (Auditing Standard No. 12).
References:
Auditing Standard No. 12. (n.d.). Default. https://pcaobus.org/oversight/standards/archived-
standards/pre-reorganized-auditing-standards-interpretations/details/Auditing_Standard_12
Average Microsoft Corp Salary | PayScale. (2019). Payscale.com.
https://www.payscale.com/research/US/Employer=Microsoft_Corp/Salary
Salary.com. (2018). Compensation Information for Satya Nadella , Chief Executive Officer and
Director of MICROSOFT CORP | Salary.com. Salary.com. https://www1.salary.com/Satya-Nadella-
Salary-Bonus-Stock-Options-for-MICROSOFT-CORP.html
EDGAR - AAPL (Apple, Inc). Edgar Entity Landing Page. (n.d.). Retrieved September 29, 2022, from
https://www.sec.gov/edgar/browse/?CIK=320193&owner=exclude
Messier, W. F., Glover, S. M., & Prawitt, D. F. (2019). Auditing & Assurance Services: A Systematic
Approach. McGraw-Hill Education.
Salary.com, S. built by: (n.d.). Compensation information for Luca Maestri, senior vice president,
chief financial officer of Apple Inc. Salary.com. Retrieved September 29, 2022, from
https://www1.salary.com/Luca-Maestri-Salary-Bonus-Stock-Options-for-APPLE-INC.html
Salary.com, S. built by: (n.d.). Compensation information for Tim Cook, chief executive officer of
Apple Inc. Salary.com. Retrieved September 29, 2022, from https://www1.salary.com/Tim-Cook-
Salary-Bonus-Stock-Options-for-APPLE-INC.html
