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Apple Lays Off 900, Sculley, Top Executives Take Pay Cuts

June 21, 1991

SAN JOSE, Calif. (AP) _ Apple Computer Inc. chief executive John Sculley took a 15 percent pay cut and slashed other top executive salaries the same day lay off notices were sent to 900 workers.

Laid off employees got the news Thursday, one day after employees rallied outside one of the Cupertino-based company’s offices to protest impending job cuts and clamor for executives to take some of the brunt of the cutbacks.

″How can a man who made $16 million understand what a family goes through when it has a layoff?″ asked Apple engineer Richard Eames, referring to Sculley’s 1990 compensation that make him the highest paid Silicon Valley executive last year.

Although the layoffs were expected as part of Apple’s announced plan to cut 1,500 jobs, or 10 percent of its workforce, over the next year, workers didn’t know exactly when or who would get the word.

The news brought tears and sad goodbyes to the halls of the Cupertino-based company.

″I saw some people packing up and I took phone numbers so we can keep in touch,″ said Apple engineer Suzy Brown who was told she would be laid off in November as part of the yearlong cutback. ″I have no desire to be here, now. I’ll probably just quit.″

Apple spokeswoman Cindy McCaffrey said Sculley wouldn’t comment on his pay cut, which will become effective starting June 28 when the current fiscal quarter ends. Other unidentified top executives will take 5 percent to 15 percent pay cuts along with Sculley’s 15 percent reduction. McCaffrey said the company didn’t know how much the total savings would be.

Apple’s five highest-paid executives together earned a total $9.9 million in salaries and bonuses last year, including $2.2 million for Sculley who got another $14 million from stock deals.

″Cutting the pay of company executives is clearly a morale-boosting move that doesn’t make much difference in the income statement for the company,″ analyst Michael Murphy, editor of the California Technology Newsletter, said after news leaked that executive pay cuts were in the works.

Apple had sales of $5.6 billion and net earnings of $475 million during the previous fiscal year ending Sept. 28.

McCaffrey said Apple set up a center in Cupertino to help workers find new jobs, and 2,000 potential listings were already available. Under the lay off plan, most employees were given generous 60-day severance package.

The layoffs were spread among Apple’s 15,000 worldwide work force, according to McCaffrey, who said more layoffs are expected as the company looks to cut another 600 jobs through layoffs and attrition.

The job cuts are part of Apple’s restructuring plan announced in May after it launched a low-price strategy involving the first Macintosh below $1,000.

The strategy boosted sales 85 percent last quarter, but slowed revenue growth to 19 percent, or $1.6 billion. Profits dropped slightly to $131.1 million.

Leaders of an Apple workers’ group, ″Employees for One Apple,″ which claims 500 members, have been talking with management since February 1990 in an attempt to avoid job cutbacks. But recently the group began considering forming a union or collective bargaining group.

Analysts said the attempt to organize and gain clout with management is in response to dissatisfaction with high executive salaries and company decisions that have put computer employees on unemployment lines.

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