By Philip Elmer-DeWitt
April 8, 2012

What part of “over 10 years” don’t its editors understand? 

New York Times
had a lot of fun with Tim Cooks’ compensation package Sunday.

It led an article about excessive CEO pay with the rhetorical question: “Is any C.E.O. worth $1 million a day?” To which it responded: “At Apple, the answer … is an emphatic yes.”

Then, dubbing Cook “The 378 Million Man,” it published a graphic comparing his total compensation package, as compiled by Equilar, to various benchmarks: Number of $199 iPhones (1.9 million), number of $4.99 iPhone apps (75.8 million), number of years of employment in an iPad factory (60,919).

Only trouble is, Cook doesn’t make anywhere near $1 million a day.

Although the text of the article correctly reports that Cook’s annual salary last year was a relatively modest (by CEO standards) $900,000, the lead sentence — and the graphic — make the same mistake the Associated Press and other publications made in January when Apple (AAPL) issued its 2012 proxy statement.

They confuse a bird in the bush with a bird in the hand.

To collect the full 1 million shares of Apple stock (technically, restrictive stock units, or RSUs) Cook was granted in 2011, he has to stay at the company for 10 years. The proxy statement is quite clear on this:

“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.”

The SEC requires a company to book a share grant’s value in the year it is awarded, however, which is why Equilar included the grant in Cook’s “total compensation package.” But Tim Cook didn’t pocket a penny of it in 2011, never mind $1 million a day.

In fact, when you spread $376.2 million (the value of those 1 million RSUs the day they were granted) over 10 years, you get $103,000 a day. That’s a ton of money, but it’s not the $1 million dollars a day (or “$42,000 an hour. Or $700 a minute. Or $12 a second”), as the Times put it.

Of course, those 1 million shares are worth a good deal more now — $633.68 million, to be precise, as of last week’s close. But given that Cook was running Apple when the value of its stock took off, you could argue that when he collects his reward — should he live that long — he will have earned it.

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