Slashdot Mirror
Apple Puts $383 Million Handcuffs On CEO Tim Cook
theodp writes "There are bonuses. And then there are bonuses. Apple's board, led by sadly frail-looking chairman Steve Jobs, signaled its long-term confidence in Tim Cook as the company's new leader, disclosing in a regulatory filing that it's awarding the new CEO one million restricted stock units that will vest over the next decade. Apple shares closed at $383.53 Friday. From the SEC filing: 'In connection with Mr. Cook's appointment as Chief Executive Officer, the Board awarded Mr. Cook 1,000,000 restricted stock units. Fifty percent of the restricted stock units are scheduled to vest on each of August 24, 2016 and August 24, 2021, subject to Mr. Cook's continued employment with Apple through each such date.'"
Yes, simply disgusting.
This way if the company continues to win and prosper, he will become wealthy. Otherwise no honey. This is the right way!
"Sum Ergo Cogito"
Motivation to look out for the long-term interest of the company instead of the next quarter.
Whoda thunk it?
Sadly, such motivation is missing from the portfolios of many CEOs.
These are not handcuffs. The only people who think these are handcuffs are day traders and speculators. Fuck them.
--
BMO
ya know.... APPL just may tumble all the way down by 2021. I guess $1million @ $1/share aint so bad either
It is a stock, it is not a unit, its an object. I hate all this waste of words to make it sound impressive. Its redundant. It distracts from understanding. It confuses most people.
Nice bonus, but $383,000,000 doesn't buy what it used to.
it's stock he can't sell for another 10 years. it's only worth 383 million if the stock price stays where it's at. Just look at GE after jack welch left. MS after bill gates. or almost any other company after an iconic CEO or founder steps down. the stock usually tanks.
usually it's the law of large numbers. you can't grow as fast when you're a huge company
Hi all... Hope this company will do the same as under legendary Steve Jobs. We will miss u Steve.
Both sides show confidence in each other - but that sure is a way to put a negative spin on it.
Fandroids hate facts.
No executive iPlane? Outrageous! If I was Tim, I would hold out for a black turtleneck so he and Steve can be known as the Apple Twinkies.
This is how you retain top talents in a company. Tim Cook is no newbie, he has been with Apple since 1998. The guy has proven himself to be capable of running Apple when Steve Jobs was away in the past. Lately, he's been leading the delegate in negotiation with China Mobile. As an Apple shareholder, I have no problem with this compensation plan: it's clear, easy to understand, and has a long term outlook.
Oh No! He actually has to care about the company! He can't just take the money and run away. This sure is horrible.
Don't come cheap!
"The average reporter we talk to is 27 years old......They literally know nothing." - Ben Rhodes
It's pretty fucking distasteful that Slashdot chose to link to the TMZ photos. Let a dying man have a little dignity and stop acting like fucking bloodthirsty creeps. Fucking sickening.
Without someone willing to buy or sell a given security at any particular time, there is no liquidity and therefore no market. Speculators make the market by being willing to buy or sell.
and monetize this asset anytime?
...on reddit, somebody posted this link: http://i.imgur.com/WV5Y0.jpg
picture has been alerted
Some drink at the fountain of knowledge. Others just gargle.
Assuming he works 10hrs a day everyday for next 10years that is over 10k and hour on top of whatever his normal salary is.
This is a perfect example of the pure stupidity in our system today. Jobs didn't need a huge bonuses to keep him in his position. He did it because that is who he was and that is what he loved doing. This slaves this fellow to the company and to the companies worth as expressed by it's stock value.
If at sometime he starts feeling like he wants to leave he won't. If the share price starts to slide, he will feel desperate. At expiration (first 1/2 in five years) all he his going to really care about is the market value of the company and not the fundamentals. Is that what we really want?
Research has shown that large bonus simply don't work (google why bonuses don't work) except for the most mediocre of tasks.
That has to be one of the worst pro Photoshop jobs I have ever seen. Since when does Steve Jobs wear dresses? Like one of the ACs pointed out, a Redditer posted an analysis of the picture. Also, since when does /. link to TMZ as a reliable source?
And move next door to a White Castle !! Maybe he could just move into the White Castle !!
I'm sure Tim Cook is good, but is he that good?
By comparison, 383 million dollars would have bought Steve Jobs' services for 383 million years.
This way if the company continues to win and prosper, he will become wealthy. Otherwise no honey. This is the right way!
He can tank Apple stock by 90% and walk away with 38m$ bonus for it. The right way?
Or he can double Apple stock and walk away with a $767m bonus.
Also keep in mind that he can be fired if he performs poorly, so if he tanks Apple stock in the next 5 years he gets $0.
That's some mighty fine booze money there my friend.
The man is sick. The mind is willing, but the body is flesh and mortal.
I hadn't seen the photo til today either... But I'm not convinced they're authentic tbh.
What is the context of the photo? Why is the man wearing what appears to be a skirt? And why does the skirt look like 2 black rectangles drawn on with MS Paint?
Make no mistake... I really don't want that photo to be authentic.
and they wonder why there is class warfare
Hard to know if the TMZ photo is legit or not. It's no like they are beneath photoshopping something to get a headline.
If he rides the company into the ground and they lose 50% of their stock price in the next 5 years, Tim Cook will get over $100 million from these stocks - that's over and above his salary and other perks. So a $20 million per year bonus for sucking - how does that make sense?
If they wanted to set incentives, he shouldn't be getting STOCKS - he should be getting OPTIONS. They should define their expectations of what a decent CEO should achieve... lets say 400 in a year, 450 in 3 years, and 500 in 5 years. They should then award him plenty of stock options that vest in those intervals and allow him by buy at that price. If he does worse than what a decent CEO should achieve then his options are worthless. If he does better than a decent CEO, he will get rewarded for it.
By awarding STOCKS, they are rewarding CEOs regardless of whether they succeed or not. You cannot reward success without first setting expectations that clearly define what success is, and what failure is.
... this picture was proven fake on so many forums and publications I can't believe people still link to it, but that's what happens when idiocracy takes its root and TMZ is viewed as a legitimate news source...
One, is it real or is some photo shop fake. Two, why is he wearing a dress?
Did you know 80 to 90% of the moderators on slashdot wouldn't recognize a troll even if one dragged them under a bridge.
That's more than 3.8 million HP TouchPads!
Have gnu, will travel.
That photo is clearly photoshopped. Spending more than five seconds looking at it will reveal that.
We're really to believe that Steve Jobs decided to put on a dress, stand outside, look off to the side, and get photographed? Really?
Really, Timothy, take out that link and the mention of being frail-looking. You have absolutely no idea how the guy looks. TMZ is clearly not a reliable source on this or, actually, anything else.
2010 List by the CIA World Factbook:
Gross Domestic Product of Niue $10mill
Gross Domestic Product of Tuvalu $32mill
Gross Domestic Product of Falkland Islands $105mill
Gross Domestic Product of Kiribati $147mill
Gross Domestic Product of Marshall Islands $161mill
Gross Domestic Product of Palau $164mill
Gross Domestic Product of Anguilla $175.4
Gross Domestic Product of Cook Islands $183
Gross Domestic Product of Sao Tome and Principe $196mill
Gross Domestic Product of Federated States of Micronesia $238mill
Gross Domestic Product of Tonga $363mill
Gross Domestic Product of Dominica $376mill
-
- - You can't take something off the Internet! That's like trying to take pee out of a swimming pool.
I might be naive on this, but isn't this how bonuses already work? I thought that bonuses were tied to performance or meeting other goals...
Not necessarily. Sometime bonuses are given out for no immediately obvious reason. Sometimes they are given out because the company board's compensation committee are a bunch of buddies who give the CEO a bonus even when the company loses money. Even if there are performance goals attached, all too often they are too easy reach. Goal oriented bonuses are difficult. Make them too easy and you don't accomplish anything. Make them too hard and they serve no incentive purpose - no point in reaching for a goal you can't actually achieve. In fact incentives in general are difficult to align with the goals of the company. For example, many salesmen are on commission based on revenue. The problem is that this motivates them to sell as much as possible, regardless of profitability. Companies have been ruined by misaligned incentives and management pay is no exception. There is an old saying that if you tell me someone's incentives I'll tell you their behavior.
I'd like to see an example of someone getting a bonus when they've been doing a shitty job (excluding the easy google result of the banks after the bailout).
How about Carly Fiorina who was given $180 million for what can generously be termed uninspired performance and a declining stock price. How about AIG awarding $165 billion in bonuses AFTER receiving bailout money. It's not remotely difficult to find examples of executives being handsomely rewarded for mediocre or even terrible performance.
It's also a clever way of avoiding income tax.
This reflects the fact that Tim Cook IS the right man for the Job, and in fact, already HAS a proven track record at Apple, since he has run the company twice (or is it three times?) during Jobs' other hiatuses (hiatii?)
He MAY be the right guy but that remains to be seen. Tim Cook by all accounts is a heck of a good executive but he's a different guy with different skills. That's not to say he will fail but he can't (and shouldn't) run the company exactly the same way because he is a different guy. The trick is to not ruin the company culture which would be easy to do. Apple's strategy is a bit of a high wire act and one bad iPhone could really screw things up. Frankly with Apple having the largest market capitalization in the world right now he's going to have a rough time keeping the stock price going up. I wish him the best of luck but he's got some big shoes to fill and lots of challenges ahead.
Did someone sell them? Or did Apple print them out of thin air?
When 35% of consumers say they will buy the iPhone 5 without knowing anything about it or seeing it , and 51% say they would buy it in the first year*,I think that's a pretty nice cushion.
And so it is but what people say they will do and what they actually will do are frequently VERY different. Let's say hypothetically that the iPhone 5 is a flop for some reason. Apple now gets about half their revenue from that product line. Cell phone buyers are notoriously fickle. I suspect most of us would switch phones in a heartbeat if we didn't like a particular phone. Sure, some people will buy even the crappiest product but Apple could easily lose a tremendous amount of revenue with just one poor or even mediocre product. It also could dent their halo effect with their other products.
Apple has been doing amazingly well and producing good products but their revenue depends on them continuing to produce exceptional products people are willing to pay a premium for. One or two major missteps and they could be in real financial trouble.
That puts things into perspective...
Sigh.
Gross Domestic Product of USA = $14.66 trillion
$383 million / $14.66 trillion = 0.0026% of GDP
0.0026% of Dominica's $376M GDP = $9823
$9823 / 10 years = $982
I guarantee you, the most talented people on Dominica make more than $982 annual income. Get some perspective, and try thinking before you post.
Is he less likely to stay if he gets 10 times less stock options ( $38.3M ) ? Probably not. Then it's a waste of shareholders money.
According to Herzberg motivation theory, recognition works better. Just give the guy "employee of the year" award on the regular basis.
Gross Domestic Product of USA = $14.66 trillion
And you're all still in debt and will be for ever more.
He gets $383 million if the stock does nothing, stays where it is (i.e. a reduction in value assuming reasonable GDP growth)? He walks away with $38 million even if he decimates the stock value.
Some mighty strong Kool Aid at work here is the land of the Personality Cult.
Sigh.
Aside from it being greater than the GDP of quite a few small nations, it's more than the income of than 7626 median income US households. At 2.63 people per household that makes it the GDP of a city of over twenty thousand typical middleclass Americans.
Get some perspective, and try thinking before you post.
-
- - You can't take something off the Internet! That's like trying to take pee out of a swimming pool.
it's more than the income of than 7626 median income US households
1) That sentence does not parse.
2) How many "median income US households" are there?
3) Reference?
The point of my earlier reply seems to have flown well over your head. Look back quick, and you might still see it.
My source is official US census data.
Median household income, 2009 $50,221
$383,000,000 / $50221 = 7626.3
So $383 million is more than the total income of 7626 dead-center middleclass American households.
I did a separate Google search to come up with an average of 2.63 persons per US household. So they are giving him a bonus equal to the entire GDP of a US city of over twenty thousand typical middle class Americans. And as the post title points out, that doesn't include his (unknown) paycheck.
The point of my earlier reply seems to have flown well over your head.
As far as I can tell the point of your previous post to illustrate "how not to apply percentages". A person getting 1% of the US GDP would be insanity beyond belief. A person getting 1% of the GDP of a country of 10 people would be in deep poverty. Equating the same percentage in the two case is horribly broken.
Your calculation was:
Gross Domestic Product of USA = $14.66 trillion
$383 million / $14.66 trillion = 0.0026% of GDP
0.0026% of Dominica's $376M GDP = $9823
$9823 / 10 years = $982
A more valid calculation for that case would be:
Gross Domestic Product of USA = $14.66 trillion
Population of US = 312 million
income per person = $14.66 trillion / 312 million = $46,987
$383 million / $46,987 = one person getting 8151 shares of income
Gross Domestic Product Dominica $376M
Population Dominica = 72500
income per person = $376M / 72500 = $5186 ($14 dollars a day)
one person getting 8151 shares of income = $5186 * 8151 = $42 million
If you want to divide that over ten years, sure, it's someone getting a bonus of $4.2 million per year in relation to $5186 per person per year for everyone else. And if we're going to divide up the bonus over the ten years then we really need to add in whatever his yearly salary is.
And your comment about "talented" doesn't fly. A talented person can definitely earn many times the average income. But when someone in an income-$5186-per-person-nation is getting a $4.2 million bonus per year, or when someone in the $46,987-per-person-income-US is getting $38.3 million per year bonus, it's not because he's talented. It's because the economy is dysfunctional, and it's because he's got the political connections or billionaire-business connections to benefit from that economic dysfunction.
And furthermore, the $383 million bonus value is based on today's stock price remaining flat for ten years. A stock price that remains flat is downright rotten performance for a CEO. From 1900 through 2010 the Dow Jones had an average rate of return of 9.4% (in stock price and dividends). If he achieves a grossly lackluster 3% yearly increase in stock price it would make his bonus $514 million. Over a half-billion dollars. If he did an average CEO job his bonus would be $940 million. And when you add in his actually salary his pay for doing an average performance as CEO it would be over a billion dollars. Yeah, it's a billion+ dollars over ten years. But you still can't claim that pay scale for average stock performance reflects any legitimate or sane or economically healthy "talent" pay.
This is exactly the sort of thing that has been weakening the US economy. Look at this graph. Advancing technologies and efficiencies increase GDP over time, but almost exactly ZERO of that growth has made it into the pockets of the majority of Americans. The rising blue line shows increased economic production, and the difference between the red and blue lines shows that all growth is removed from the pockets of the majority of Americans and ALL being poured into a few ultra-wealthy pockets. That graph is showing the Paris-Hilton-Taxcuts, it's showing TrickleDownEconomics that never trickles down. It shows two dec
- - You can't take something off the Internet! That's like trying to take pee out of a swimming pool.