How much do Apple employees earn?
Adam Lashinsky, in an excerpt from his new book, says that Apple employees aren’t paid particularly well:
If they don’t join for a good time, they also don’t join Apple for the money. Sure, Apple has spawned its share of stock-options millionaires — particularly those who had the good timing to join in the first five or so years after Jobs returned. “You can get paid a lot of money at most places here in the Valley,” said Frederick Van Johnson, a former Apple marketing employee. “Money is not the metric.”
By reputation, Apple pays salaries that are competitive with the marketplace — but no better. A senior director might make an annual salary of $200,000, with bonuses in good years amounting to 50% of the base. Talking about money is frowned upon at Apple. “I think working at a company like that, and actually being passionate about making cool things, is cool,” said Johnson, summarizing the ethos. “Sitting in a bar and seeing that 90% of the people there are using devices that your company made — there is something cool about that, and you can’t put a dollar value on it.”
This is interesting — but I think it understates the importance of stock options and restricted stock units. Apple is that rarest of beasts, a fast-growing company with a low stock price. And you don’t need many RSUs at $430 a pop before you’re talking real money. A job offer from Apple is certainly a treasured thing and most people aren’t going to turn it down just because the salary isn’t north of $300,000. But money’s still important and Apple employees have actually been much better paid than Lashinsky implies.
We can do some very basic back-of-the-envelope math here. When Apple went public in 1980, it had 61 million shares outstanding. It has since split three times, so those original 61 million shares have now become 490 million shares. Today, however, Apple, has 929 million shares outstanding. Which means that over the years, Apple has issued 439 million shares.
Where did those shares go? There haven’t been any secondary offerings, so none of them went to investors. And Apple is not particularly acquisitive, so few of them went to buy companies, either. Apple does buy some companies with stock, but those deals are rare and don’t account for all that many shares: even the NeXT acquisition, which brought Steve Jobs back to the fold, was paid for with $429 million in cash and only 1.5 million shares of stock.
So it’s fair to assume that the lion’s share of the newly-issued shares — let’s say 400 million, to keep numbers round — have gone to employees. And 400 million shares, at $430 each, is $172 billion.
To put that in perspective, Apple now has 60,400 employees. 36,000 of those work in the retail segment; we can assume they don’t get options or RSUs. So excluding retail, Apple has about 24,400 employees. Let’s double that number, to include all the employees who have left over the years — call it 50,000 in all. $172 billion divided by 50,000 employees is $3.4 million per employee.
Now I’m not saying that the average Apple employee has made $3.4 million in stock options and RSUs. Most of those options and RSUs will have been exercised, at prices well below $430 per share. (On the other hand, most current employees have options and RSUs which haven’t yet vested and therefore aren’t included in the 929 million number of total outstanding shares.) But the fact is that Apple has been generous in terms of handing out equity to its employees, and there’s no reason to believe it won’t be just as generous going forwards. And the most recent datapoint we have — the 1 million RSUs given to Tim Cook when he became CEO “as a promotion and retention award” — certainly doesn’t make it seem as though Apple is stingy with its equity-based pay.
I’m sure that Apple doesn’t pay more than it needs to and I’m also sure that demand for Apple jobs significantly exceeds the supply of those jobs. But if you properly account for options and RSUs, I suspect that Apple turns out to be a pretty generous employer — more so, in any case, than Lashinsky implies.