Is new Apple CEO Gil Amelio worth his millions?

Apple Computer Inc. has world-class problems. And now it has got a chairman and CEO who's pulling down a world-class pay package. Gilbert F. Amelio, a board member since late 1994, who took the helm on Feb. 5, will earn at least $2.5 million a year, according to Securities & Exchange Commission documents. And if he meets unspecified performance goals, the total package will be worth between $10 million and $13 million annually.

That doesn't quite make him a superstar among high-priced turnaround experts--but he is close. According to executive-compensation expert Graef Crystal, IBM chief Louis V. Gerstner Jr. earned $17.2 million in 1994, while AlliedSignal CEO Lawrence A. Bossidy took in $30.5 million. But Amelio stacks up better against the likes of Eastman Kodak CEO George Fisher, at $6 million. ``He wouldn't make the finals of the biggest-pigs-in-America competition,'' says Crystal. ``But these are high numbers.''

Here's the nitty-gritty: Amelio will get $2.5 million in annual salary and guaranteed bonus, as well as a $5 million loan. The remaining 75%-plus of his possible pay is tied closely to Apple's financial health--in line with industry practices, analysts say. He will also get options to buy 1 million shares at the current market price. In addition, he has grants of up to 200,000 shares for each of the next five years, along with the potential for additional cash bonuses for as much as $2.5 million more per annum. If Apple changes hands within the next year, Amelio gets a cool $10 million.

``GETS WINDED.'' The question now is whether Amelio, 52, will be worth the investment. Having turned around Rockwell Corp.'s communications unit and resuscitated National Semiconductor Corp., he clearly knows how to make an impact. At Apple, he has already nixed the quarterly dividend and moved to squelch takeover rumors.

Over the long haul, though, Amelio's track record is troubling. National Semiconductor's stock has seriously underperformed the S&P since last May, according to Crystal. ``He's Mr. Bell-Shaped Curve,'' Crystal says. ``He's good at the 10-yard dash, but tends to get winded.'' Given Apple's problems, the board had better hope Amelio has developed some stamina.



Updated June 14, 1997 by bwwebmaster
Copyright 1996, Bloomberg L.P.
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