New Apple CEO to Get at Least $2.5 Million

Apple Computer Inc. promised Chief Executive Gilbert Amelio at least $2.5 million in annual compensation even as the money-losing personal computer maker suspended its dividend.

Amelio, who took over from ousted CEO Michael Spindler on Feb. 2, will receive a base salary of $990,000, a 42% raise from his pay as CEO of National Semiconductor Corp., according to documents Apple filed with the Securities and Exchange Commission.

The 52-year-old executive will also receive an annual performance bonus of at least $1.5 million, according to the filing.

“It’s high for a company that’s losing a lot of money,” said Marian Kessler, portfolio manager at Crabbe Huson Group, which owns about 1.1 million shares of Apple.

Apple also said in the filing that it will suspend its quarterly dividend for the first time and report a loss of more than $69 million in its fiscal second quarter.

Apple’s shares were down 25 cents at $28.125 on Nasdaq.

Kessler said Apple had little choice other than to offer Amelio a huge incentive to come to the company.

In the SEC filing, Apple said it may fire more employees than the previously announced 1,300 and may contract out some of its manufacturing operations.

It also said it will take restructuring charges in addition to the $125 million already planned for its fiscal second quarter.

Even so, some industry watchers were unimpressed.

“I am outraged--this just makes you want to puke,” said compensation expert Graef Crystal. “What it says is another looter has arrived. He ought to wear a black mask and carry a bag.”

Crystal said Amelio’s compensation should be based on his performance.

Amelio’s bonus, which has two parts, can be as high as three times his base salary plus an additional $1 million, which could make the total as much as $4 million this year, according to the filing.

The five-year contract also stipulates that he will receive a lump sum of $10 million if Apple is sold or there is a change in control in his first year.

Amelio also received a $200,000 signing bonus and options to buy as many as 1 million shares of Apple stock. The options will vest 20% each year.

In addition, he will get a stock bonus based on the company’s performance. The annual target for the stock bonus is 200,000 shares, with the total for five years not to exceed 1 million, according to the filing.

Apple shareholders will vote on the stock bonus and options at the annual meeting next January.