The legendary investor, at a crucial moment, sings the praises of Apple’s CEO.
Tim Cook must have felt good while reading the traditional letter sent every year by Warren Buffett to the shareholders of his Berkshire Hathaway (BRK.A) – Get Berkshire Hathaway Inc. Class A Report conglomerate.
The words used by Buffett to describe him must have filled Apple’s (AAPL) – Get Apple Inc. Report CEO with happiness and comforted his confidence as they came at a time when Cook really needed them.
Despite a track record that would make more than one CEO green with envy, Cook faces two fires that ignited at the same time and on two different fronts.
On the one hand, a proxy advisory firm called shareholders to block his remuneration at next month’s annual shareholders meeting and employees at some Apple stores are organizing to create a union.
“Tim Cook, Apple’s brilliant CEO, quite properly regards users of Apple products as his first love,” Buffett wrote. “But all of his other constituencies benefit from Tim’s managerial touch as well.”
These praises will undoubtedly reduce the nervousness, even the tension among potential shareholders who must not have appreciated seeing the name of Apple making the headlines about the working conditions of employees at a time of rebirth of syndication.
Apple is a Member of Buffett’s Big Four
Buffett’s rescue operation didn’t stop there.
The billionaire assured Berkshire Hathaway shareholders and fans that Apple was now one of his conglomerate’s best investments. The company is part of the Four Giants, Buffett said. It comes in second place in this circle which constitutes the core of the best returns on investments for Berkshire Hathaway.
“Operations of our ‘Big Four’ companies account for a very large chunk of Berkshire’s value,” the iconic investor said.
He added that: “Apple [is]our runner-up Giant as measured by its yearend market value.”
“Our ownership is a mere 5.55%, up from 5.39% a year earlier. That increase sounds like small potatoes. But consider that each 0.1% of Apple’s 2021 earnings amounted to $100 million. We spent no Berkshire funds to gain our accretion. Apple’s repurchases did the job.”
Apple is outranked in Buffett’s ranking only by the insurance business. And for good reason: “Leading this list [of Big Four] is our cluster of insurers. Berkshire effectively owns 100% of this group, whose massive float value we earlier described.”
“The invested assets of these insurers are further enlarged by the extraordinary amount of capital we invest to back up their promises,” Buffett explained.
Tim Cook must have appreciated this strong support from the Oracle of Omaha, which is still very influential both among business circles and among individual investors.
In his annual letter, Buffett does not mention the difficulties that Cook is going through.
Difficulties Pile Up for Cook
Institutional Shareholder Services, a proxy advisory firm on all things having to do with responsible governance, urged its clients recently to vote down the generous package that Cook received for his compensation in 2021.
The proxy advisory firm wants investors to block the $99 million pay and bonus package promised to Cook during the annual shareholders meeting that will be held virtually on March 4.
In its message to clients, ISS said there is “a significant concern” over the $82 million in stock awards that Cook received as part of his compensation. The package also included a $3 million salary, a $12 million cash bonus and just under $1.5 million in personal security and private jet costs for a grand total of $98.7 million.
The more-than-generous compensation reflects not only Apple’s size and success (shares rose by 31.88% in the last year) but also Cook’s 10-year anniversary at the helm of the company after taking over following Steve Jobs’ death.
While not commenting on this specific ISS recommendation, Apple has previously named Cook’s leadership as what helped it briefly reach a market cap of $3 trillion in January and become the first company in the U.S. to do so.
In fact, more than 90% of Apple’s market cap has come during Cook’s tenure. The stock was $13.34 when he took over in August 2011. It closed Friday at $164.85 for a market capitalization of $2.69 trillion.
Employee groups from at least two Apple retail stores are backed by major national unions and are preparing to file paperwork with the National Labor Relations Board in the near future.
Spurred by wages that have stagnated below the rate of inflation, and encouraged by successful efforts by Starbucks (SBUX) – Get Starbucks Corporation Report employees to form unions, retail workers say they hope they can push the world’s most valuable company to share more of its record-setting profits with the workers who sell, repair and troubleshoot the products it sells.
Apple retail employees said they want better work conditions and wages, according to a letter sent to Tim Cook.
