Apple announced that its Chief Financial Officer (CFO) Luca Maestri will be stepping down starting January 1, 2025.
But he is not departing from Apple permanently, instead, he will transition from his role as CFO to lead the Corporate Services team. This role encompasses information systems and technology, information security, and real estate. He will report directly to Tim Cook.
Kevan Parekh, the Vice President of Financial Planning and Analysis (FP&A), will take over as CFO and officially join Apple's executive team. Cook lauded Maestri for his "instrumental" contributions to enhancing the company's financial performance during his decade-long tenure as CFO, a position he has held since May 2014.
He expressed enthusiasm for his new role. Meanwhile, Parekh, a ten-year veteran at Apple known for his deep understanding of the company, has proven indispensable in various functions including financial planning, market research, and investor relations. Parekh's prior experience at Thomson Reuters and General Motors positions him well to succeed as CFO. This leadership transition is set to take effect on January 1, 2025, with Maestri continuing in his current role until then.
Transitions Stirred the Investors
Having served as CFO for a decade, Maestri has successfully maintained investor confidence through his management.
During his time at Apple, Maestri built quite a reputation for keeping the company lean. While other tech firms were spending big on flashy projects, Apple managed to keep its expenses and corporate research low. They also didn’t hire as much during the pandemic as some competitors, which helped them avoid any large-scale layoffs.
With all that Maestri has accomplished, some analysts think investors might not be too thrilled about him stepping down. JPMorgan analysts, led by Samik Chatterjee, noted that even though this was part of a planned succession, investors could feel a bit disappointed considering how much progress Apple made under Maestri's leadership.
Apple dropped this news on August 26, 2024, Monday, after the market closed. With this shift, it appears Apple strategized this announcement to coincide with the invitations for its Glowtime event on September 9, 2024. At first, their stock took a little dip in extended trading, but by Tuesday, it bounced back, wrapping up the day with a 0.37% gain.
Seamless Succession Planning
Some experts argue that this is the smoothest transition possible. Parekh is a familiar face to many analysts and brings a wealth of experience from his time as Apple’s VP of FP&A. The Apple CEO mentioned that Parekh has been an "essential" part of the financial leadership team and really knows the company inside and out.
With 11 years of institutional experience with the company, Parekh has the required qualifications to step into the role. However, his low profile may cause uncertainty among investors and analysts. Investors usually prefer stability, and unless there is dissatisfaction with an executive's performance, leadership changes can induce unease.
Of course, bringing in new executives always comes with risks. But when it’s an internal candidate, those risks are usually lower since they already understand the company culture and operations. According to Josh Crist, a co-managing partner at Crist|Kolder, “Apple gets an ‘A’ for succession planning. This move ‘de-risks’ the hire…you know exactly what you are getting in such an important role.”
In managing these shifts, Apple appears to employ a narrative reminiscent of how it handled Jony Ive’s exit in 2019 by creating a façade of ongoing involvement. Apple claimed that Ive would continue contributing to the company as a freelancer, with Tim Cook emphasizing collaboration on exclusive projects. Despite varying assurances from both Cook and Ive about ongoing participation, insiders later revealed that there was never a substantial plan for such an arrangement.
Similarly, the narrative surrounding Maestri indicates he will remain with Apple in other capacities, overseeing Corporate Services, including technology and real estate. However, transitioning from CFO to roles perceived as secondary suggests a quiet exit may follow, with another announcement regarding his retirement or departure possibly occurring within the next year.
Apple CFO's Legacy
In his interview, he shared some strategies on how he's efficiently running the CFO Office at Apple.
“We run very lean. We run the finances of Apple with a team 1/2 the size of a company 1/10th our size. I have an IR group of 2. The group that manages $230B of cash is 7 people. If we have the right people we don’t need a lot of them”
Maestri has boosted shareholder value and helped the company dive into emerging markets while successfully buying back stock. Since he became CFO in 2014, Apple shares have skyrocketed over 800%, and the company's annual sales have more than doubled!
He was one of the top 10 highest-paid CFOs in 2023, with a total compensation of $26.9 million! As Apple’s long-time finance chief, he really got rewarded for his hard work. His pay package included a whopping $22.3 million in stock awards, $3.57 million in non-equity incentive plan compensation, and a $1 million salary, according to a proxy filing from January 11. However, Apple hasn’t shared any information about Parekh’s future pay.