Tim Cook to take 50% pay hit after shareholder feedback
theguardian.com
theguardian.com
I’m curious to know what kind of pay cuts the CEOs of Meta, Tesla, Amazon, Netflix, Uber and other (tech and non-tech) companies are taking. Not just cuts in base pay, which is usually a paltry sum, but bonuses and other compensation.
When the share price falls, the CEO and other executives take an automatic pay cut that's pretty directly linked to that (linear in the case of RSUs, superlinear in the case of options).
The problem with shares is that they have become (or maybe have always been) a purely speculative asset. They rarely reflect the reality, and are always expected to just rise rise rise in price. Even if literally nothing changes, the company remains stable and profitable, the shares will take a dive because continuous unlimited growth is always expected.
At the end of the day all stock market returns come from one's of 3 things:
Dividends
Earnings per Share growth
Multiple expansion
Over the long run the speculation that you so decry ( which amounts to Multiple expansion) has a negligible impact (less than 1%).
Sure you have plenty of short term booms and busts, but over the long term they are really irrelevant.
None of which really reflect reality, and rely on basically pure speculation.
They also depend on the stock to go up up up up.
> Over the long run the speculation that you so decry ( which amounts to Multiple expansion) has a negligible impact (less than 1%).
Over the long run stocks are just speculation.
Dividends (especially for companies with a long track record of paying and increasing them) are reality as far as I can tell.
Stock PICKing is speculative because we can’t predict the future. But that doesn’t mean that the future is unhinged from underlying fundamentals.
The problem is that we're talking about an ASTRONOMICAL sum of money when it comes to people like Tim Cook. After the 50% pay cut, he's still making $49 million. Beyond a certain level of wealth, the numerical value of one's compensation becomes effectively meaningless. It's just theater for him to say he's taking a "pay cut".
Depends on your lifestyle inflation. Even for the high earners in the US, 49 million per year is FIRE money, but if you're used to the life of an oil sheikh with luxury clothing, jewelry, art, exotic private parties, dozens of rare supercars, private jets and yachts, McMansions/penthouses in London, Paris, Geneva, NY, Tokyo, etc., some private island where it's nice and warm, and also want to leave a similar lifestyle for your kids and their kids and their kids' kids, then 49 million per year is basically poverty money.
You'd think a quote like this, pulled out of context, would change its meaning once seen in context. It doesn't.
There's a vast difference between not being able to afford an absurd lifestyle of consumption and extravagance and being able to eat.
Someone's who's salary is cut from $100M a year to $49M a year, no matter how insane their spending was, isn't going to suffer.
If it's not clear: someone having to choose to buy a Ferrari instead of a Bugatti because of a pay cut is not the same as someone having to choose between shelter or food because of a pay cut.
Using a 3% withdrawal rate, $49m let's you safely live off $1.47m per year, far above what "high earners" are even earning. And that's just a flat $49m. You are saying $49m per year. That's a fucking ludicrous amount of money. Even if your hobby is dropping Bugattis off cliffs you won't exhaust that much income.
If you have options on 50K of those same shares at a strike of $80, the options are in the money by that same $1M. If the shares go down by 10%, the in-the-money amount falls by 50% (to $500K) rather than by 10% (to 900K).
Which can be a big deal. It also lets the shareholder control when they take on the tax liability.
They don't have to overcharge for App Store services, and have anti-competitive rules like forbidding developers from even showing price breakdown to the customer paying for this or having lower prices on other platforms. They don't have to have "you're not allowed to compete with the iOS" rule in the App Store. They don't have to push users towards Apple Music, Apple Maps, and Apple TV by limiting APIs for third parties (and fame it as it's either Apple favoritism or straight up malware dichotomy). They don't have to expand advertising …except every quarter they must squeeze more money out of users, and they've run out of places where they can do that without degrading user experience and doing asshole moves.
Given that he's pledged to give away his money before death, I don't think he's super concerned about it.
https://www.forbes.com/sites/howardhusock/2015/03/29/tim-coo...
Why can't that be done by whatever organization he gives it all away to?
The Ford Foundation was founded in 1936 and is now worth $16 billion.
The Rockefeller Foundation was started in 1913. By the end of 2016, assets were tallied at $4.1 billion with annual grants of $173 million.
He probably is, but it always surprises me that billionaires think they know when they will die.
Obviously, it is what it is if one were to die unexpectedly, but that is an obvious caveat that does not need a disclaimer.
Another possibility is they are encouraging others to make the same commitment.
> JUST IN: CEO of biggest company in the world donates 90% of their wealth. Articles for years about how they did it.
> CEO of biggest company in the world joins many others in promising giving away most of their money but not doing it.
Mind you, I have nothing against rich people and crazy spending. Just don't pretend like you're so magnanimous if you're not actually doing it.
My prediction is the donation from the Patagonia founder (whose name I have already forgotten) will be written about fewer than 10 times in significant distribution in the two decades from 2025 to 2044. Whereas the giving pledge type of billionaires will be written about more than annually on a per capita basis.
It's the same reason I think that politicians are reluctant to quickly deliver on their promises. Because those promises represent pain points which represent the power to get them (and their party) elected in the next election as well. That power goes away if the pain point is solved.
Wealth doesn't typically sit under the mattress doing nothing. While the person is alive, they can control how that wealth is invested, and do good that way. Giving it away while still alive would take it out of their control, and perhaps they think that keeping control will do better from a philanthropic perspective.
MacRumors reveals that Cook last week donated 10,715 shares to an undisclosed charity. As of the date of the transaction, August 20, 2020 that would put their value at a little over $5M. The gain in value since then means that the shares were worth almost $5.4M as of yesterday’s close.
Cook revealed in 2015 that he plans to give away all of his wealth during his lifetime.
Cook says that he has already begun donating money quietly, but that he plans to take time to develop a systematic approach to philanthropy rather than simply writing checks.
He regularly donates AAPL shares to undisclosed charities.
Amazing PR scam.
Also note that the pledge is only to give away "at least half" which is pretty unambitious for a multi-billionaire. If you have $10 billion and give away $5 billion, you've made no impact on your own life and sacrificed nothing. It is not comparable to someone with $100,000 giving away $50,000.
So instead of promoting redistribution of wealth while they’re alive, they make sure they get all the power, status, influence, and benefits of their wealth, and only once they’re dead or near it do they plan on giving it away.
Everyone does that, pledge or no.
Not a smaller base salary, or performance related bonus (which is seemingly guaranteed), but a smaller extra bonus bonus.
His $40mil of shares next year will probably be the same number of shares he received last year for $75mil anyway.
Also the number of shares is irrelevant, only their value when issued. And Apple's stock is currently only about 10% less than its average over the last year (from a rough eyeballing), so no, it wouldn't be the same number of shares anyways.
The number of shares is irrelevant, only their value when they become unrestricted in a few years time.
It's really not huge.
He's worth north of $1b (USD), so his 'pay' is ~4% of his wealth - compare that to yourself / any other human you know.
For a 62yo to churn through $1,500,000,000 (and interest earned on same) before they die will take some serious effort, but negligibly different effort than the $1,550,000,000 this story implies he'll have to contend with in a year.
If he was so inclined he could just call it quits after the cut out of spite, and hit those shareholders with a stock nosedive over the uncertainty and signalling of his departure. Of course his Apple stock would take a dive too, but it will be worth the fun!
For $1M/year and an average life expectancy of 80 years, he should be OK for 12-30 years, even with a decent stock hit :-)
It’s an advisory vote, so the company doesn’t have any legal obligation to act on it. But it forces the company to take a straw poll and share the results, which can be enough to nudge them into acting on it, even when only ~35% disapprove.
What if he has a cause that he's working toward? Like he's donating X million every year toward Y disease cure? Because maybe he has a cousin or something with the affliction or some other personal reason. This is exactly what Bill Gates is working on with Malaria
You think he can just flip a switch from American businessman to becoming a PhD level biologist and epidemiologist and be actually effective at getting anything done?
He's funding the work of experts in the field who have dedicated their lives so that the solution can actually be advanced.
He's both the right person for the job because he's a billionaire, and the wrong person for the job because he's a billionaire in tech.
You're confusing treatment (make people feel better while sick) with cure (make it actually go away forever)
woooo, I can play the what if game too: What if Billionaires gave their money to the gov't as part of taxes like the rest of us?
What if the gov't did that, since they're better situated to finding and distributing the right resources to the right people than a random billionaire is at just "fixing disease". (Not saying they're good at this, just that they're better at acting in the interests of the people than "pick a billionaire from a hat to save us all")
What is your point?
You came onto a thread about time cook and his Apple compensation and started complaining about govt tax policies?
Which is a direct response to your original point which was an absurd hypothetical about how Tim Cook should be allowed to make as much money as he wants, cause what if he maybe ends up doing some good for society. I agree with the original point that people don't really need much more than a living wage...
I'm saying that it's absurd to pray for Billionaires to do good for the rest of us, when we could just tax them, and make them do it. That's where the gov't comes in.
95% if your company takes federal funding.
Dude you’re so deep in your own mind hole. Read the post again to see that no such point was ever raised.
OP “I can’t see why anyone would do this” and I tried to help add a perspective so that they might be able to get a little bit more from the world, as if lending a magnifying glass. It was a question and answer about human motivation, not govt policy.
At no point do I assert that someone -should- do something or that some position is morally justified over others.
You might consider that you get into ~200% more arguments than you actually should and your combativeness turns would-be allies into enemies.
You're providing a justification for why someone would need more money. Why would you do that, if you don't believe that they should be able to do that? This is such an obnoxious level of not sticking to a reasonable interpretation of what you said.
I know you didn't say the word 'should', but if you don't see that you providing a defense (in the form of a case for why they should need more money than what the original commenter stated) of billionaires reads as you cosigning why they should be allowed to make billions, then maybe, legitimately, you should take an English literature class? Like, this reads as pretty Gas-Lighting behavior to me. I'm not responding to things you didn't write.
Not saying Apple is worthless but a lot of the rise in price of the past two years had nothing to do with the CEO's actions as for every other stocks.
Miserable HN devs strike again
Jet, driver and security paid for plus $100mil bonus each year, no problems at all.
His salary is already a negligable portion of his compensation.