Apple to link executive bonuses with environmental values

By Rahul Vaimal, Associate Editor
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In its annual proxy filing, the US-based iPhone maker Apple said that it would alter executive (senior managerial positions) cash bonuses based on whether they act within the social and environmental values of the company.

But the company did not specify how it would evaluate progress toward the company’s publicly stated targets such as removing carbon from its supply chain. Apple has listed six values that include environmental practices such as using recycled materials in products, diversity and inclusion among its workforce and the privacy and security of its devices.

“Beginning in 2021, an environmental, social, and governance modifier based on Apple Values and other key community initiatives will be incorporated into our annual cash incentive program,” the filing said.

What changes?

Apple said its minimum performance requirements, its targets and its maximum payouts of cash bonuses to executives will not change. But the compensation committee of its board of directors will use the new modifier to increase or decrease bonus payouts by up to 10 percent “based on the Compensation committee’s evaluation of our named executive officers’ performance with respect to Apple Values and other key community initiatives during 2021.”

The filing did not detail how the committee would evaluate executives based on progress toward Apple’s publicly announced goals around its values.

Responsibility towards the environment

In July, Apple said it plans to remove carbon emissions from its entire business, including its products and sprawling supply chain, by 2030. At the time the company said it aimed to achieve 75 percent of the goal by reducing emissions, with the remaining 25 percent coming from carbon removal or offset projects such as planting trees and restoring habitats.

Apple cited the new modifier in its recommendation to vote against a shareholder proposal to reduce executive pay relative to the median employee pay at Apple. Chief Executive Tim Cook’s 2020 compensation of $14.8 million was 256 times greater than the median Apple compensation of $57,783.

“America’s ballooning executive compensation is neither responsible for the society nor sustainable for the economy, especially under the current pandemic crisis. Reducing the (named executive officer) pay ratios should be included in the principles of executive compensation program,” the proposal reads.