Schmidt's Apple Gig: He Worked for Free
A review of Apple's (AAPL) proxy filings with the Securities and Exchange Commission between 2007 and 2009 shows that during the three years the Google (GOOG) CEO served as an Apple director, he accepted almost no pay or benefits from Apple for his service. Apple announced Aug. 3 that Schmidt stepped down from its board, citing more vigorous competition between the companies.
An Apple spokesman didn't comment on Schmidt's reason for declining the compensation. Google had no comment, either. But forgoing pay has become Schmidt's M.O. recently. His Google salary is $1 a year, and he didn't accept stock options for the past several years, according to a Google SEC filing.
Different from Other Directors Schmidt's decision not to be paid for his Apple service differs from the compensation plan Apple put in place for directors in 1997, around the time Steve Jobs returned as CEO. Under the plan, Apple grants outside directors the option to acquire 30,000 Apple shares. The options vest over three years. For every year after that, directors are granted options to purchase an additional 10,000 shares, which vest immediately.
Additionally, Apple pays directors an annual fee of $50,000, in quarterly increments of $12,500. Apple filings show that Schmidt, from the beginning of his service as a director in 2006, declined both the retainer fee and the stock options.
Instead, Schmidt bought Apple shares on the open market. In September 2006, he purchased 10,000 Apple shares during a month when a buy of that size would have cost about $740,000. The value of those shares would be nearly $1.7 million today, based on Apple's Aug. 5 closing price of 165.50 per shareÂ—good for a 130% return.
Gore Got More Gear So what did Schmidt accept from Apple? Lots of tech gear. As of Apple's fiscal 2008, directors have been allowed to receive one of each new product the company introduces, free, plus the right to buy more at a discount. In fiscal '08, Schmidt received $8,712 worth of Apple equipment.
Only directors Al Gore and Arthur Levinson, chairman of Roche unit Genentech, got more. Gore took $13,161 of equipment, and Levinson $8,923 worth.
Directors also received what Apple describes as a "commemorative gift" for their service, said to be worth $7,580, plus a payment to cover the tax liability for accepting the gift, which in Schmidt's case was $14,631.The filing doesn't disclose what the gift was but, several Apple executives, including Chief Operating Officer Tim Cook, Chief Financial officer Peter Oppenheimer, iPod division head Tony Fadell, and Mac division head Robert Mansfield received similar gifts.