Probably thousands? Just put a job ad for "Apple CEO" out there, set pay at a generous 10 million/year and I'm pretty sure you won't have issues finding qualified candidates.
I really don't think Apple's valuation would change much if Tim Cook is replaced, so I don't see what justifies such a large bonus.
The risk of getting that wrong and accidentally destroying billions of dollars of shareholder value (don’t like the term, but it seems appropriate here) is very high (low likelihood, extremely high severity).
As a board member, why would you take that risk, when not taking the risk is so cheap? Ultimately I don’t think the risk weighted expected return on finding a cheaper CEO is greater than just paying Tim whatever number he pulls out of his arse. I suspect expected return is actually substantially lower (probably very negative) than what Tim gets paid.
Boards of directors are scared of getting it wrong, and they memorialize that fear in contracts that throw tremendous amounts of money at their preferred candidate, often making guarantees regardless of performance.
But it’s not like boards have a spectacular record on picking CEOs in general. Well-regarded people blow it as CEO every year, but they still get tons of money. Why? Because of this deep belief that “CEO-quality” people are extremely rare, so every plausible candidate is incredibly precious.
To be fair, business boards are not unique in this failing. Professional sports teams fall into the same trap all the time.
What I take issue with is the idea that companies and boards are making irrational, or economically illiterate, decisions by paying CEO this amount. I just don’t think that argument stacks up.
As you say yourself boards don’t tend to be very good at picking executives, and may of them are probably aware of that. So why rock the boat when you’ve got a CEO who’s performing.
If you want to talk about the social consequences of CEO pay, that’s a different story. I would be quite happy to support the idea of CEO pay caps linked the lowest paid employee (I leave the question of what qualifies as an employee as an exercise for the reader). But I think that’s a very different argument to an economic argument.
Definitely happened for HP when they took on Leo
Apple's current valuation is $2.49 trillion. A trillion is literally a million millions.
So that puts them at 2,490,000 millions. Due to meeting various goals, Tim Cook is getting 750 millions. That's ~0.03% of the company's valuation.
Apple's valuation wouldn't have to change very much before it would have been better to keep Cook in charge, even with higher compensation.
It sure seems like whatever Tim Cook is doing is working. Remember when Apple went through three CEOs in a decade and nearly went bankrupt? Mismanagement of a company for even a few years can put a company in a tailspin for a decade. For a mature successful company Tim Cook is exactly what you want. Why mess with success?
Your choices I imagine are the other Apple executives and the CEO of another International technology and/or manufacturing (potentially) company.
Right, all the people running Amazon, Wallmart, Nasa, BMW, Tesla, Spacex, managing contructuon of nuclear powerplants have no knowledge of supply chains.
You know, an iPhone or a macbook has more parts than an A380
Lmfao. Hacker News, never change.
There's one person in the world with a proven track record of succeeding leading the world's most valuable company over a decade. This compensation is a drop in the bucket relative to even a single strategic mishap by a less qualified candidate.
There is no justification needed (in the traditional sense), but there was one anyway: board set a goal, Tim had to meet that goal, and then they'd give him the money.
Say Apple made a couple hundred billions under Tim Cook's leadership and the way was paved for more of that in the coming years (keep in mind that there is no day-to-day, this really is many-year-planning; you practically have to predict the future to some extent), is a fraction of that really such an odd case to pay the person that did that?
Sure, you don't need that much money to live comfortably forever, but this is capitalism, I doubt the value created was needed either. But the board and Tim agreed and met their goal and thus the transaction was completed.