Apple Awards Tim Cook 1,000,000 Shares of Stock as CEO Bonus to Stay Until 2021
macrumors.com
macrumors.com
You could find a lot of capable people willing to do the job for a lot less.
But if you pay them a fixed salary, even $1m, that isn't directly linked to the performance you're looking for, then the game is to avoid anything too risky, even if the expected value is very high, if it might endanger the CEO's job. The game would be to take the minimum risk and do well enough to not get fired, and that's it.
If Tim Cook manages to double the stock price, he'll have $700m. If it drops to $100, he'll have $100m. It's a big difference, and his interests and risks are aligned with the shareholders.
Anyway, that's the theory. Give too much stock, and you're impoverishing the shareholders for little benefit. Don't give enough, and a superstar might decide he'd rather do a startup or an incubator LOL, or he may not want to pursue the same kind of risk-reward as the people who hire him.
$100m is still a great deal of money. I guess going to $700m, it's the difference between superrich for life, and a legacy of being a great leader and dynastic wealth LOL. Nice work if you can get it.
Is it? I would imagine the lifestyle one could afford with $100M is identical to that with $700M.
small jets start in the single digit millions. Decent jets (10+ people) are $50M easily, costing $1M+ a year. yachts can get extreme. Add in a few homes throughout the world and you've burnt through that $100M easily. Think of it as comparing a toyota to a bentley.
Maybe that’s why so much has to be payed. A million or so more doesn’t cut it.
But that aside, we're talking here about quality of life which does not equal being able to pay for the craziest most expensive ideas that you can come up with.
Not everything I'd want to do would have an immediate commercial payoff, which would rule out investors. That, in turn, would rule out anyone else doing it, which is why having a wealthy backer is necessary.
>But that aside, we're talking here about quality of life which does not equal being able to pay for the craziest most expensive ideas that you can come up with.
If I'm retired, the ability to do those things would be a huge influence on quality of life for me.
If something is a good idea, you can probably persuade some other people to contribute to it. If you can't persuade anyone, it's probably not a good idea. Even if $500M wouldn't get the job done, it'd be enough to fund a prototype or demonstrator that could attract more funding.
-- Arnold Schwarzenegger
I definitely hope she is wrong and wish him the best.
I found the photo: http://ll-media.tmz.com/2011/08/26/0826-steve-jobs-02pcn-cre...
That being said, personally for me I do not see AAPL going anywhere but UP in the long run for the simple reason that I take my colleagues and friends for my "guesses" rather than "technical" analysis or nervous traders dropping shares when Mr Jobs says "boo!!". Those peers and subjective impressions were good enough so far when all of a sudden everyone wanted an iPod back in the day before iPhones and sure enough suddenly Apple got all successful and continued to grow.
Now I see the same situation with the iPhone and iPad - I see people here who never heard of Apple some 5 or 10 years ago going crazy over those products and they cross-buy into the Minis and Airs and iMacs and all those other products.
I do understand very well that the stock market is completely unpredictable and very random and good sales numbers can mean nothing but... my bottom line is: all those non-techs and former PC+Windows users jumping on the "ohmygod apple is so awesome!" train for some time now and everybody loves Apple here and they have built an excellent company and generally have a very good and positive public image as an innovator and they do not stop to amaze people with little awesome details and continue to do so in their Apple stores and on top of that I am convinced that they single-handedly CREATED the iPhone-smartphone market and tablet/iPad market[1] and I don't see that changing any time soon. And now with the "Mr Jobs" uncertainty out of the way and his very DNA and spirit woven so closely with that company on ALL levels and him still being on the board, I am not worried the slightest bit and just regret I don't have more money to invest right now.
[1] I realize there were smartphones long time before the iphone and I know there were kinda tablet-thingies before but in my book, Apple created products that simply did not exist before and oh boy did they get it RIGHT and thereby they created two completely new markets and now the masses are buying into it like crazy - none of this existed before. Those are Apple markets and you can see how similar any competitors' products are to Apple's products, no matter how good or bad those "clones" might be. Apple created those markets and they have displayed an excellent and sell-able understanding of both.
I remember seeing, in academia, a lot of macbooks appearing around about when Mac OS X 10.1 first came out. This then later seems to have spread.
In a possibly similar way, I now see a lot of grumbling about macs, people going back to windows and linux, and android phones popping up everywhere. Not a guarantee of failure, but I think a lot of people are getting annoyed, particularly by the limitations of the iPad, which feels increasingly crippled the longer you use it (can't just quickly edit a LaTeX file, run LaTeX on it, and then submit it to svn).
This is just one tiny sample, at one university. It will be interesting to see if it spreads, or dies.
Going from macs to linux puzzles me, because the mac OS is unix (though not linux) underneath: you have the best of both worlds, usability + power.
The iPad is a simplified product (at present, anyway). Awkward for power users, but great for the huge mainstream who value simplicity over power. Apple is a consumer electronics company these days; a Sony. Geeks are a much smaller and less lucrative market.
The various package managers (brew, ports, fink) seem to often brake, and have packages broken for months.
You could look at the P/E. It's certainly not the only thing you should look at (a company can boost profits by creative accounting, or by cutting research to make short term gains and boost the CEO's bonus, and there's other factors too), but if you want a back-of-the-envelope way to see whether the price is right, P/E is the obvious choice.
Apple and Microsoft: http://ycharts.com/companies/AAPL/pe_ratio#zoom=5&compCo...
Microsoft is cheap - under 10. People figure it will earn lots of dough, but gradually lose out. If you think Microsoft will reinvigorate itself, and start capturing large and profitable new markets, it may be underpriced.
Apple at ~15 is pricey, but not really high. People figure it will continue to grow (compared to Microsoft), but it's no longer a hot new thing with huge growth potential.
Then there's Dell, which is making money, but with a lower P/E people figure it's likely to be bled dry before Microsoft.
Of course, this is comparing three tech companies. The P/E of all these companies will be hit by broader market factors (which I don't understand). But by comparing similar stocks, you can ask which one the market seems to have been most wrong on. Will Apple go on strongly but not really grow much, while MS limps, and Dell fizzles?
I've googled it, but it's hard to find the appropriate meaning, since search results seem to focus on the "laughing out loud" sense... "Limit of Liability" was the closest meaning I could find on the Wikipedia disambiguation page ( http://en.wikipedia.org/wiki/LOL_(disambiguation) ), but it doesn't seem to fit in this context.
He is using it as the word that the Laughing Out Loud initialism became, which has slightly different usage and meaning. (e.g. in the common phrase "I did it for the lulz.")
Is it a lot overall? Yes. Is it comparable to the same position in similar companies? Probably, I haven't done the comparison. I know a lot of banking CEOs have been making much more for nearly wrecking the economy.
I generally think the C-class officers to average employee salary is way out of whack. But, I think, given the job Tim Cook has been doing and the contribution to the valley and economy that has resulted due to Apple's success, I feel is is more than merited this generous plan.
If Apple were bleeding or just average? That would be one thing, they have been running on all cylinders and Tim Cook has been instrumental in that.
58 million dollars is more than I'll ever make in my entire life.
But I really do wonder how much additional incentive all that money can offer. At a certain point it gets impossible to spend any of the additional money.
Take Bill Gates for example. He has accumulated far more money then he could ever spend on himself, so he went a different route and pledged to give much of his fortune away to causes he feels are worthy to give to. Remember, the process of Bill Gates giving away his money has spawned an entire business around that process:
As for philanthropy, I'm reminded of a billionaire friend who said his fortune was more of an administrative burden than his business ever was.
I know I directly benefited from a Carnegie library as a kid. With philanthropy at this scale there is potential to benefit humanity in a way that may otherwise not happen. Compare this to other paths that wealthy people have taken, such as creating trusts that mostly benefit the family and still exist today (e.g. Rockefellers).
An incentive to the egocentric. I don't think that is ever the primary motivator though. I'd like to believe most people just like helping others.
Not really a Softie to Softie comparison. The Gates give away more than a $billion per year.
http://www.gatesfoundation.org/about/Pages/foundation-fact-s...
Secondly, he wouldn't hand pick someone who didn't share his vision. Cook is smart, he's not going to drastically change the course of the company like some other cough HP cough companies have done.
Considering these two things, I'd say the stock prices will stay the same if not continue to increase in value.
Money is certainly handy when your plan is to change the world but it’s far from the only thing you need and probably not even the most important one. An idea and a plan seems quite important, for example. Just throwing money at a problem will seldom get you very far. Also, even a few billion won’t save you when some super power declares you a criminal, takes away all your money and throws you into prison or executes you.
But what if you want to buy and run a sports team?
Or foster special technical projects under your own steam?
Or back a charitable foundation for the progress of -foo-?
Or build a mansion with a long heated driveway... and be able to run it?
&c
Honestly, given the context of the comment, what did you think I meant?
"I have a lot of money. At last I can buy a very nice home, have no debts, set up large trust funds for my kids/friends/whatever, maybe buy a yacht and scoot around in it" is what I mean by 'middle-class', aka 'living the way I always dreamed' kind of stuff.
"I have a lot of money. I'm going to buy an NBA team and run it, and also fund a charitable organisation to eradicate malaria in Cambodia. Then I'm going to give patronage to an art school" is not.
My point being, in 2010 Tim Cook already got 52M of restricted stock awards, so this number spread out through the years is nothing out of ordinary for him.
Did you mean should? Or would?
"More than I thought it would be" connotes that he was surprised.
"More than I thought it should be" connotes that he thinks it's too much.
Not "more than".
There's still ambiguity, like you said, but its different ambiguity
Nice work, if you can get it!
Buffett's tax rate hovers around 15%, because the lion's share of his income comes from cap gains and qualified dividends. Cook will be paying more than double that on his income from this deal.
From http://money.cnn.com/2011/08/26/technology/tim_cook_stock_bo...
Tim Cook alone is taking home 5% of all the money Apple spends on employee compensation worldwide. If you cut down Cook's compensation a little bit, everyone else at Apple could get a couple percent raise.
Which one would REALLY be better for the company: paying every single Apple employee a couple percent more enabling Apple to hire better people across the board, or paying it all to the CEO?
People need to recognize how grotesque it is that you have a CEO making $160,000 per day, every day.
I don't have a problem with this at all. $300M is about 1/1000 of the current market cap. The rewards are spread over 10 years. So 1/10000 per year to have a world class CEO running the company. Would I pay that? Gladly.
What's the difference between 580 million and, say, 200 million? It's funny money either way, and the person's quality of work is going to depend on other motivations.
Y'all really don't think they could've gotten him for cheaper?
Pay more, demand more, get more. Only idiots (or the truly broke) focus on cheap when they're standing in the spotlight. What you really want is value. And given that their stock didn't crater in what is, again, the most sensitive transition imaginable, their non-asshole savvy already paid for itself several times over in the last 48 hours alone.
If you're going to cut corners, play lowball, or just or drive a hard bargain, fine. But be sure you're doing it in places where you can afford to lose he deal.
Look, I'm not an Apple investor and I haven't bought any apple products in the last couple years or so, I really don't care and it's not my business. But with my read on human nature, the guy would do the same exact job for 10 mil a year as he would for 58 mil a year.
Christ, what total lunacy.
And what if Cook decided this is bullshit, and goes? Then what? That's right, total implosion. And for nothing.
And by the way, since when is 'cheap' a part of anything that Apple does?
Besides, that is not his salary or anything. Who knows, he might follow in the tradition of Steve Jobs and take a $1 salary.
Or they could use the money they have and give everyone including Cook huge raises. Or cut everyone's pay and make their stuff cheaper. Or pay their suppliers 20% more. Or put a huge check in some charity basket. Statements like these are pointless.
I'll suggest that it's very likely that Tim Cook would have never come to work at Apple if they paid executives 40-60% less then they do as you suggest. And that would have been a net loss for Apple.
Steve Jobs sure as hell was. And Tim's job has been to execute Jobs' vision.
People need to recognize how grotesque it is that you have a CEO making $160,000 per day, every day.
Take it to Reddit.
People need to recognize how grotesque it is that you have a CEO barely being taxed on their income compared to what they would've been taxed during the greatest economic boom of the past twenty years.
I'm an AAPL shareholder, and I support the board's largesse. Pay him more for all I care, as long as he delivers and my stock appreciates. I would love it if the US government would, relative to the current situation, tax the shit out of me and Tim, both.
> enabling Apple to hire better people across the board
I'll make an assertion of my own: I don't think this is true for a second.
So yeah, taking into consideration that Apple is suddenly working with a CEO that arguably requires less compensation than Jobs, my issue isn't with the amount, but rather how he's taxed and more broadly, the large divide between the top income tax bracket (35%+) and capital gains (15%) which is really terrible, considering that it consitutes an enormous tax loophole for people who earn their income via investments, rather than a traditional wage.
That's probably why a 5-year period also favors Cook because Apple will be required to withhold tax on the market value of the stock, and it's tricky how that withholding is paid - for cash grants they withhold a percentage of that sum to satisfy the estimated tax, but unfortunately for stock grants, sometimes the grantee is required to pay that estimated withholding to his/her company if they don't have enough cash compensation to offset it. I'm interested to hear how Cook gets around that $100m+ tax liability, but he has 5 years to prepare.
Most of the commenters in this thread feel, as you do, that CEOs need to be paid a shit-ton of money, or else they would never work for Apple, but the rank-and-file do not need to be paid a lot of money, because Apple is such a great company to work for. Can you explain the discontinuity? Why is Apple great to work for as a peon, but terrible to work for as a CEO? Why does extra money paid to a CEO definitely and absolutely result in a better CEO, but extra money paid for employees won't get them better employees?
Keep in mind the studies that show highly paid CEOs underperform low-paid ones when you answer.
> Why does extra money paid to a CEO definitely and absolutely result in a better CEO
When did I say this?
> Keep in mind the studies that show highly paid CEOs underperform low-paid ones when you answer.
I'd love to see these studies. I'm very curious to see how these CEOs' compensation packages are structured.
If you go back through my comments from the past week, you'll run into this one: http://news.ycombinator.com/item?id=2907364. Although you didn't mention this, I think it's still relevant to this conversation.
The key difference between Tim Cook and, say, Leo Apotheker is that Tim's been at Apple for 12 or 13 years, and plans to be there for another 10 at least. He's been inculcated in the culture, and still has to answer to one of the co-founders. I doubt Leo lasts longer than three years. What does Leo care if the company's long-term strategic positions are weakened as long as he maximizes his compensation package?
[1] http://www.glassdoor.com/Salary/Apple-Software-Engineer-Sala... and http://www.glassdoor.com/Salary/Google-Software-Engineer-Sal...
With that said, all that cash they are sitting on is really interesting, considering they've been hoarding it for a while. Jobs was criticized for this in the financial arena, but his position always referred back to the days when Apple almost went down the drain. That has made them ultra-conservative from a financial perspective.