Boards protected CEO bonuses as tariffs threatened business. Now, as Iran disrupts trade, CEOs may get more protection

When Apple CEO Tim Cook and his executive team received their performance targets for fiscal 2025, the board set a modest bar for bonus payouts. The new targets, including sales and operating profit, did not require Apple’s leadership to expand the business—the board set goals at the same level or below the prior year’s results, citing “trade policy” and an “uncertain macroeconomic outlook.”

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At the end of the fiscal year, Cook and his team delivered lights-out, extraordinary results anyway, not only blowing past the lackluster bar set by the board, but handily surpassing the prior year’s results, with net sales increasing 6% and operating income increasing 8%.

Cook collected the maximum bonus payout of $12 million—just as he would have, had the company not performed as well, thanks to the safety net offered by Apple’s board.

Apple’s board is hardly unique. An exclusive analysis of pay data from 50 public companies by Compensation Advisory Partners (CAP), published Friday, reveals how corporate boards across America use a range of techniques—more-conservative targets, widened performance curves, and flattened payout ranges—to protect CEO compensation from uncertainties like the chaos of President Trump’s Liberation Day tariffs in 2025. According to CAP’s findings, total pay for CEOs in 2025 rose 8% year-over-year, with annual bonus payouts up 4%. Meanwhile, median financial performance was generally flat to up, with median revenue growing 2.9% and earnings per share down slightly at negative 1.6%, the analysis found. Even among companies with the weakest payouts due to underperformance, CEOs still collected 87% of their target bonuses, up from 77% the year before. The share of companies that landed in the lowest bonus payout tier was down, from 15% in 2024 to 9% in 2025.

Now, with the Iran conflict erupting weeks after most companies finalized their 2026 incentive goals—and global stock markets down roughly $3.5 trillion—some market observers expect that boards will soon be holding the same conversations again.

“They’re not necessarily making decisions today, but they’re just having the conversation about the approaches they might consider at year end, and let’s see how the year plays out,” said Joanna Czyzewski, a co-author of the study and principal at CAP.

To be sure, some of the change among the weakest-performing companies in the CAP report is because of improving results. “Some of it is definitely business improvement,” noted Lauren Peek, a partner at CAP and co-author of the study. But, she said, there are a lot of ways companies can soften the blow of uncertainty and curveballs like tariffs.

“You might have growth in your targets, you might have widened the curve and the wings,” Peek said. “It’s—for lack of better words—easier to get into the money, because at the end of the day, these executives are trying to do the right thing.”

The Escape Hatch

Among the early-filer companies in the CAP study, their fiscal years end between August and October 2025. That means Trump hadn’t even won the election when they were budgeting and planning for the 2025 fiscal year. Company proxy statements, which include compensation details, provide examples as to how some companies dealt with impending tariffs which later came to fruition on April 2, 2025, before the Supreme Court struck them down last month. (Trump has since imposed a global 15% tariff.)

At personal computer and printing giant HP, the company didn’t wait for tariffs to hit before crafting a plan. In January 2025, at the same time the board locked in HP’s fiscal 2025 performance goals, the HR and compensation committee approved an explicit tariff carveout. Then, when it came time to calculate bonuses for CEO Enrique Lores and his executive team at year-end, the committee stripped out the “net impact of tariff-related costs” from both annual and long-term incentive calculations, the company disclosed in its proxy statement. HP said the adjustments “reflect the net impact of the tariffs after management’s actions, including significant and swift movement of the company’s manufacturing and supply chain along with additional cost reductions and price increases.” That included shifting more than 30% of HP’s manufacturing from China to Southeast Asia and Mexico.

Ultimately Lores and the executive team earned 67.3% of their target bonus on average. HP described the tariff hit as having “unexpected magnitude” on its financial results and annual and long-term incentive plan calculations after the relevant goals had been set, suggesting that the bonus payouts would have been lower had the tariff impact not been excluded. The compensation committee also used discretion to bring down the executive payouts in line with the broader employee pool, a small acknowledgment of the optics of shielding C-suite executives while the broader workforce takes it on the chin. Lores collected $1.9 million and then stepped down from HP in February and j