Norway's sovereign wealth fund to vote against Apple management's pay plan
reuters.com
reuters.com
But given that his net worth is already $2B, most of which is Apple stock, it seems like he's already incentivized to set Apple up for long term success, one because he has so much stock, and two because he's clearly not working for the comp, but for the love of the game.
They do have a tradition of taking stances on corporate governance as a matter of principle and this looks like that.
The fund has a policy of being an active investor to improve worker rights, prevent unethical practices and has a ban on investing in certain areas like weapons, oil and gas (due to diversification issues), tobacco etc.
Edit: Just a note, the funds operation is completely transparent and you can follow the actions and read about strategy, what time frames they are looking at when investing (very long) and more on their web page [1].
Obviously this is a different issue but it’s important for govts to be consistent. It’s like during WW2 when the Royal family obeyed rationing.
It was from around 2014-2015 if I recall correctly.
I bet most peope in the world would retire after only one year of his base salary ($3M in 2021).
edit: not considering taxes ;)
3M is absolutely a mind-boggling amount. Ok, housing in San Francisco will eat most of that, but the vast majority of people in the world retire on way less than that
You’re missing something big here. Most people who retire on way less than that are doing so at retirement age.
For example, let’s assume death at 78. The money required to retire at 30 needs to last 48 years. The money required to retire at 65 only needs to last 13 years. And that’s not even taking into account that social security is only available at normal retirement age and you wouldn’t be contributing to it by retiring early.
$3 million is not going to be a secure retirement. It’s going to be very modest living subject to ruin by either inflation (if you go the bond route) or depressions (if you go the stock route).
If you can't get by on that (2x median income in US, top 10% income in the US, top 1% in the world)... You have problems.
Even if you somehow got it entirely tax-free and had no living expenses such that you could start with a $3M balance after a year of work, I’d wager that the vast majority of people would choose to work at least 2 years and many would choose to work 4 or 5 years and that only a small minority of them would quit after 1 year.
Wouldn’t you rather work 2 years and live on $20K/mo rather than just 1 and live on $10K/mo?
Of course it works better if your closer to Tim’s age than in your 20s or 30s.
The average tech worker family income in the US is well past 50k. Looking at how poor the savings rate is, I would suspect they are spending a lot more than 80k.
Even outside the bay area.
Many of us have no desire to retire at 30 and live a life of poverty. To do what? Play video games all day?
Much rather work for longer, and do something...
Excluding NYC and Silicon Valley, definitely easy to spend $40-50k depending on where you live ... a lot harder to spend the rest ...
I mean, some people live below the poverty level just fine. Power to you if you can.
But $300k will only allow you to indefinitely draw down $12k per year / $1k per month. Considering health insurance is mandatory and costs $4k+ per year - that's not leaving you much.
When you have your time to yourself you can pursue helping people, which builds community and unquantifiable opportunity and prosperiry around you. I can see how most people these days would have no faith in that since each family lives in a bubble where they don't need or know anyone else because they have enough money to pay through the nose for everything. They get no benefit from the community in that case.
Besides. Having $300k I could invest most of it and buy half a mountain with a decent house and a barn here.
[1] https://www.issgovernance.com/file/policy/active/americas/US...
That being said, if his wealth is all in AAPL, then he would earn about 1/2% on it - roughly $11 million per year.
Its making a point about a position it's held for a while; that it closely scrutinizes all its investments, a habit it's had for a while, and one it attributes to it's success relative to the nations small size.
He's in it for the money, or the competition. Competition for the money.
If you are world-class at something and people will pay you to do it, why wouldn't you get paid for it? Just because you want to get paid doesn't mean you don't love it.
First, commitment and single-mindedness, but also it's inefficient to harvest capital gains (and pay tax on it) if you don't have to; you have to make a 20% delta in the stock you exchange for to make up for it.
So their argument is that a nuclear super power invaded a country with little to no provocation, so hey let's make a point and disinvest.
So far so good. Definitely a good position to take, and one I agree with. Then again Iraqis are wondering why they are still invested in Apple, a US company...
Russia may take the Russian-speaking parts and annex it... but they are run by very smart people, so they are not going to try to annex a territory which has a large population of native-Ukrainian speakers brainwashed against them... which could lead to long never-ending civil war. Not to mention, Ukraine is literally the poorest country in Europe (gdp/capita), so if they annex it, it will be more of a libility than anything even if they could guarantee some form of peace.
They'll try to recreate what they have in Belarus in Ukraine i.e. get rid of the puppet America has installed and install their own.
They toppled what they had to during WW II and have had the occupying army there to this day making sure that they don't have to topple anything for the forseeable future.
So US invading Canada is unacceptable but Iraq is OK? Or Canada is also OK because its not part of Europe?
We're not robots.
Did Ukraine do anything like that to Russia?
I'm not trying to argue that Saddam Hussein was a nice man... But that's a stretch to still attempt to justify the US invasion of Iraq with 9/11. That's like saying the US should attack Germany because some the 9/11 hijackers lived here and studied here. And France, because "it's in the region". Or bombing Canada because Mexican narco criminals repeatedly murdered US citizens and Canada happens to be in the region (and supports narco terrorism by buying some of the drugs).
Most of the 9/11 attackers were Saudi nationals, none were Iraqi. The "mastermind", according to US intelligence, was bin Laden, a Saudi national (who was technically stateless after his citizenship was stripped by the Saudis long before 9/11), who resided in Afghanistan and Pakistan (and Sudan and Saudi Arabia before that). The US Senate investigation found that Saddam Hussein and the Iraqi nation had no role in 9/11.
Iraq had nothing to do with the 9/11 attacks and US leadership was aware of that at the time.
I hope they've started doing that, say, a couple of weeks ago. If so, they could have a good chance to liquidate most of their positions and transfer the funds.
If the Norwegian fund is selling it's equity stakes in Russian companies, it's going to expect something in return, and that something is usually money, which the Norwegians have no plans to leave in Russia, as getting out of Russian assets is the whole reason for the divestiture in the first place.
fond = fund
-et is the definite article "the", which in Scandinavian can be appended
thus "the oil fund"
Ohh, I've seen this a lot. Huset, systembolaget, etc. That makes sense.
Either way, two entities came to a voluntary agreement on an exchange of services and compensation. I have not heard of a better model yet.
If the issue is income/wealth gaps in society, then that is better solved by implementing huge marginal income/wealth taxes such that the can be rewarded hundreds of millions of dollars, but they will only end up with a small portion of it.
~100 million/year says he isn't.
It all comes down to how you define "useful work" and value. A big part Tim Cooks value is simply being a known factor. You might not like that this is valued more than 1,000 engineers, but that doesn't change the reality of the situation.
He's just not that unique. The employees should be paid more and Tim should be paid less.
His value is being Tim Cook: Apple CEO since 2011. This is something that nobody else on the planet has and 1,000 engineers can't build.
The problem is, frequently everyone else doesn't get to play a second game.
He is clearly working there for reasons other than money, at this point.
That's not how perspective works.
How’s this for perspective. Simply sitting on his 2bil invested at a 6% return he’s getting 120mil/year. He does not need that money as a motivator.
For example, all other things being equal, would you pay someone working for you less because you found out they were the beneficiary of a large inheritance? I hope not; I hope you would keep paying them equitably according to their performance relative to market, I think?
If you have millions or billions in the bank, you’re working for reasons other than wealth accumulation. You should be paid a living wage (like everyone) and derive your status and satisfaction from things besides a big number getting slightly bigger.
Obviously we live in a world where markets impact how much you have to pay to retain someone beyond that livable wage threshold - but both tim cook and the “ceo of apple” job are not exactly fungible commodities, so it’s not a healthy balanced market that we should trust to invisibly-hand itself a correct valuation.
Some people like you mention don't care about pay, don't demand it, and don't get it, others do care.
It seems like you are mainly making a point about how Tim Cook should think and feel about his job, when he clearly has a different opinion.
As you say, Tim Cook is not fungible and wants to get what he is worth.
So, it’s being put to a vote and they could deny it, and if they do the question is will he walk?
That fact that he has 2bil in the bank and is still doing the work he’s doing suggests to me that he might not. CEO of apple isn’t a fungible job. I don’t believe tim cook wants to be CEO of any other company. If he wanted to leave no dollar amount could keep him, similarly, i’m not sure a pay cut would send him packing.
Perhaps I misinterpreted you post. If that is your position, than I totally agree.
>So, it’s being put to a vote and they could deny it, and if they do the question is will he walk?
I think that all depends on the alternative proposal. I think they most likely outcome if it passes is that Tim Cook will be offered more money but with a longer lockup schedule. If they came back and said "hey richie, you have enough in the bank and should work for the average salary", I think it is likely he would walk, even if he is not primarily doing it for the money.
The arts sector has a higher proportion of people with wealth because it doesn't pay very much, not the other way around. i.e. they are the only people with the required educational background who can afford to take those jobs. It's not like the arts organizations are trying to figure out who to employ and say "hmm, if we decide to have low pay, we can recruit a bunch of trust-funders and spouses of investment bankers".
By and large, it doesn't matter what your personal situation is when the market sets pay for a position. The comp package for a staff software engineer in SV is X, and it's not going to be X * 0.5 because the employee has a trust fund or X * 2 because the employee has seventeen children, five of which have expensive medical conditions.
The whole reason that boards have compensation committees is to figure out what the "right" level of executive pay is. It doesn't matter who is in that seat. If Apple decides to pay Tim Cook only $1, then what kind of a signal are they sending to the people who might replace him? Instead the board is going to set reasonable, market pay and if Tim Cook wants to give it all away through philanthropy, or even waive the entire package (i.e. taking all but $1), then that's up to him.
Yes this is obviously true. If the pay is low and you’re poor you’ll go elsewhere if you can. But my point is those rich people stay in that field even tho the pay is low, because they like the work. I suspect most CEOs would stay in their job if you cut all CEO pay by 1/10th, not that doing that would make their job low paid. As long as you did it across the board, instead of just at one company. My evidence for this? In 1985 ceo pay was 30x the average worker. In 2015 it was 271x. That’s a 9x increase. And yet in the entire period from 1985 to 2015 there were plenty of people seeking the job of CEOs.
You’re telling yourself a free market capitalism just-so-story. This is the way it is, therefor this is the way it must be. But there are plenty of non-free-market forces that push ceo salaries higher. Monopolization is a big one. Tax code is another one (stock grants as pay pushed rates up), etc.
There are obviously non-free-market forces that affect compensation but none of them work by considering the individual; they all start by considering the position and the market for the position.
The number of people looking for the position is also a meaningless metric. Go anywhere on the internet and you can find people who are desperate to get software engineering jobs and yet somehow compensation keeps going up. Only the availability of qualified candidates and the competition for them matters.
> There are obviously non-free-market forces that affect compensation but none of them work by considering the individual; they all start by considering the position and the market for the position.
Free market does NOT apply when you consider the individual. Considering the individual, there is no free market value to Tim Cook, because Tim Cook has a monopoly on Tim Cook. A monopoly is not a free market. Which is, of course, why he can ask for 100M/year in compensation... but it's not necessarily a good reason for anyone to pay that amount.
Anyway, all of this is academic. I'll be voting with my shares to block the pay hike, but that position will almost definitely lose.
If you cut the max pay of doctors to $50K/yr, in 20 years, you’d have a lot fewer high-achieving students going into medicine and doing something else (law, engineering, etc)
That's the only way I've come up with to visualize massive wealth, as it is so far beyond anything I have experience with. That the closest visualization is the size of a town that could be entirely devoted in perpetuity to the whims of the person with that wealth.
Fixed my comment, thanks for pointing that out.
Maybe this is just an endemic problem, but it seems to me that big companies have lost the ability/desire to cultivate their own people. Nowadays it's "let people's salaries and career growth stagnate if they choose to stay internal", yet complain when they jump ship to another company that's willing to pay more with a promotion. And at the same time contribute to the problem by being very willing to hire external candidates at salary multiples compared to people from inside, while putting up unreasonable bars for promotion from within.
I have yet to see any large company get this formula right. Not to say that I long for the days when you could make a career out of working for GE or something, but you imagine that some respected company (Apple?) could make it so that people wanted to grow and stay with them. Give people responsibility, roles, develop them for a career rather than trying to shortcut it with an external person who looks good but ends up being just talk.
Maybe that's impossible nowadays with the pressure to move on to a new product every 3 years.
such cross-pollination improves overall state of the industry (in particular it optimizes for efficient use of programmers time - burning that time on low productive unnecessary tasks can be done only by either very rich companies or by companies who hire cheap barrel bottom) and results in development of better technical talent at higher wages. As direct participants and beneficiaries we should celebrate it.
Just look at the alternative like say lawyers - you have to suck up to your higher-ups for many years before getting any way ahead.
Pretty bad example in my opinion. Top law firms have fixed seniority based compensation. They firms all pay the same and move in lockstep unison.
I thought Apple remained one of the most admired companies in the world, to the point where they can pay lower salaries than most competitors and still get the best candidates. When are you saying that this changed?
If he thinks they can't replace him and go as well he has financial incentive to stay. If he thinks they can replace him and go better he only has financial incentive to stay if they pay him ever more every year.
It's a great way to destroy morale.
They measure the average salary for such a large company? This number seems absolutely pointless to me.
Elon did some deal that if he pumped Tesla stock up to what seemed to be unbelievable at the time heights and other what seemed like impossible goals he'd make major bank.
The target was taking tesla from something like $69B market cap to $650B market cap - he did that and got it to 800B+.
So, is his pay valued at the value when he cashes in / gets his bonus, or the value of the bonus at the time of award (much much lower).
A good example is this: Greece and Italy paid their politicians best in all of Europe, while Norway pays their politicians worst. Yet it seems Greece and Italy got stuck with the worst politicians.
I don't think that is an accident. With too much focus on compensation, you just attract greedy and corrupt people rather than people who want to make a difference.
I do think CEOs should get properly compensated, but the idea that at CEO magically performs 10x better because you pay him $10 million instead of $1 million is so absurd that you have to be a libertarian to believe it ;-)
Human motivation cannot be reduced to a simple question of monetary compensation. Research into this suggest that human motivation in relation to compensation works more in terms of inflection points. If your pay is so low you feel underappriciated, you will not perform well. Once salary gets high enough that you feel appreciated, further increases is not going to increase performance.
People don't hold back performance until they get paid a billion. There is a threshold at which point people will perform as well as you can expect from compensation alone. Beyond that other facts will matter: Joy of working with your co-workers, belief in the mission, interesting tasks etc.
Maybe it makes more sense to hire a designer like Ive as CEO.
Also making huge gambles on things like M1 / Apple Silicon show that Apple is still innovating and leading the way - even in spaces that were starting to be stagnant.
Let’s also not forget hugely profitable hardware lines under Tim such as Apple becoming the number 1 biggest watch retailer by revenue, and dominating the wireless earphones market (which it pretty much established itself too).
I think the Dutch East India Company still holds that crown.
i just don’t think it’s fair to look at the stock price of microsoft during ballers tenure at microsoft without applying the lens of the broader market.
This is an extremely hard to imagine scenario...
The man is the most charismatic person I've ever seen speak in person. Given just how badly he ran Microsoft, I really think his ability to convince people of stuff is some kind of superpower.
The only problem is, how much risk are Apple ready to assume for that decision?
Any change or lack of action can take years to hit the bottom line.