Apple Delays Bonuses for Some and Limits Hiring in Latest Cost-Cutting Effort
(Bloomberg) – Apple Inc. is deferring bonuses for some divisions and expanding its cost-cutting efforts, joining its Silicon Valley peers in streamlining operations in uncertain times, according to people familiar with the situation.
The postponement will reduce the frequency of bonuses for some of Apple’s workforce, said the people, who asked not to be identified because the plan was not publicly announced. Regardless, the company limits hiring for more positions and leaves additional positions open as employees leave.
In the past, Apple has typically handed out bonuses and promotions once or twice a year, depending on the division. The biannual teams usually saw this in April and October. Under the new plan, this group will not receive any bonuses or promotions over the next month, and all departments will move to an annual schedule – with payments not coming until October.
The majority of Apple’s businesses had already transitioned to a once-a-year plan for bonuses and promotions, including software development and services, but employees in operations, retail, and other groups were still on the expiring semi-annual plan.
Apple, the world’s most valuable company, began tightening its belt last July as runaway inflation and recession fears spurred it into a more cautious stance. The iPhone maker has avoided the kind of mass layoffs afoot at most of its tech peers, but it has slashed budgets, slashed employee targets and suspended hiring in several departments.
Apple shares pared gains after Bloomberg reported the news on Tuesday, falling to a session low. The stock was up about 0.3% to $150.96 as of 1:48 p.m. New York.
Employees should continue to receive their full bonuses, only in one instead of two installments. Still, the change could come as a blow to employees, especially because Apple hasn’t announced much in advance in some cases. Employees often count on such bonuses for their personal budgeting. The move could also potentially help retain employees who may have planned to leave the company after receiving the April payout.
The change applies to engineers and other non-managers and middle managers, but not senior executives at director level and above. Apple’s most senior employees typically see their bonuses paid quarterly. A spokesman for the Cupertino, California-based company declined to comment.
Apple is facing a sales slump, adding pressure to keep operations lean. Sales fell 5% during the holiday quarter, a sharper decline than Wall Street had forecast, impacted by problems in iPhone production and sluggish demand for Macs and portables. A decline in sales of a similar magnitude is expected in the current period.
During Apple’s shareholder meeting last week, Chief Executive Officer Tim Cook said the company remains extra careful with money.
“We are very prudent and prudent about spending and we continue to be very prudent when it comes to hiring,” he told shareholders. Operating expenses in the holiday quarter were below expectations and rising at a slower pace than in the past, Cook noted. Still, he added that Apple continues to “invest in innovation.”
As part of this more cautious approach to spending, Apple has cut travel budgets and now requires senior vice president approval — the company’s most senior level below the CEO and operating chief — for additional budget items. It has also laid off some contract workers across the company.
Read more: Meta cuts 10,000 jobs and cuts 5,000 more vacancies
Still, Apple employees have generally been in a less precarious position than those of other big Silicon Valley companies like Meta Platforms Inc. and Alphabet Inc.’s Google, which have suffered deep cuts. Apple has avoided layoffs in part by being more measured in its hiring and spending during the pandemic.
As part of the moves, Cook is taking a pay cut himself. In January, Apple announced that its 2023 compensation would decrease by more than 40% to about $49 million. Shareholders approved executive pay packages at Apple’s annual meeting last Friday.
In addition to cutting costs, Apple’s HR department took a closer look at how often employees come into the office. The company’s current policy requires employees to work from an Apple building three times a week — a policy that was controversial when it was introduced last year. Some employees are now concerned that increased office attendance controls are a harbinger of the company firing workers who don’t meet the three-day-week threshold.
The concerns have extended to Apple’s retail employees. Several of those employees said that stores are increasingly auditing hours worked and attendance. And some part-time retail workers have said they feel they are being encouraged to quit by being asked to work more hours and days than they agreed to when they were hired.
(Updates with stocks in sixth paragraph.)
©2023 Bloomberg LP