Top 1 percent of earners (with incomes over $540,009) pay over 40 percent of all income taxes.
I am utterly disgusted. More than two weeks no adequate response over CSAM and "scanning" of all devices and already media is pushing the "new shiny things are coming" and PR for the Tim Apple.
This is sickness on whole new level. Just sayin.
The money was distributed among the workers - which include both people behind the counter and executives like Cook - as the shareholders chose and agreed. Arguably they chose to allocate it like they did (which workers to incentivize more and which less) because they consider that it maximizes their own profit by attracting good workers and motivating them, and they chose to offer Cook a deal that (especially in retrospect) looks very lucrative. Perhaps it was worth it and perhaps it's just gifting him undeserved money - but in any case it's their right to do as they wish even if they spend their money stupidly and randomly give it to someone and not someone else, since all of it (i.e. Apple, it's assets and profits and the value created) belongs to the shareholders, and workers - both people behind the counter and people like Cook - get only what they agreed with the company and thus it's owners/shareholders.
https://fortune.com/2014/03/01/apples-tim-cook-picks-a-fight...
If Apple had not roughly 10x'd in value over the last decade this would be a ~75m payout, and that's not even accounting for the fact that a lot of this was likely tied to increasing the share price.
It's an obscene amount of money, but it's not today's Apple giving Tim Cook $750m, it's 2011's Apple agreeing to give him 5m shares if he did well.
Edit: Misread the article, "191.83% over the last three years"!
Apple is worth about 11x what it was worth 10 years ago.
Think there might have been one or two other people involved in that. Maybe even a few more than that.
Tim deserves credit for running such an successful operation. Do you really think those running-up phone makers aren't looking for someone like Tim? The competition in the phone market is real.
Although we could also argue Tim failed in a way with the rise of Huawei and Xiaomi where we had to block the competitors via 'national security' concerns.
Success during one's life , paying it back to make the society a better place once gone. Take a bow, Mr Cook. What more can one ask for in a lifetime :)
Compared to the total value of the company, if anything it seems small.
I'm normally a proponent of reducing income inequality. But this has got me thinking. Is the world actively better off when billionaires like Cook/Gates/Buffett make a ton of money.
Consider the alternative: someone in the 75th percentile of USA income gets a fat raise. Most of this money is spent on a nicer house, a nicer car, eating out, going on vacation, etc. Contrast this against a billionaire who has signed the giving pledge. They spend a small fraction of this money on themselves. And the majority ends up going to charitable causes such as educational initiatives, HIV research, deworming, clean drinking water, etc.
Ironically, big payouts (and tax breaks) for billionaires* would do more to help the needy, compared to raises for the upper-middle-class.
*This only applies to those billionaires who have committed to donating most of their wealth of course
USSR has learned this lesson the hard way, so it is sad to see how many well-off Americans a rushing head first into it voluntarily?
Trust me, you won't like the results. You have a 200square meters house? Nobody needs that many space, and also there are so many homeless in Los Angeles. You take two rooms 24square meters each, and the rest of the house would be distributed among the needy.
Do you like this perspective? This was the first thing done when Bolsheviks came to power in Russia, I'm not kidding. All in the name of equality.
Imperial Russia was an absolutist autocracy in theory for most of its history and in practice for all of it. Does being against despotism mean that I have to give a couple rooms from the property I don't own?
IIRC there are places (Japan?) where it had historically been considered more unseemly for CEOs to get paid so much more than everyone else below them. But there’s no law of nature that says low performance goes with that.
You should see what some states have done in the name of freedom and democracy elsewhere
Times that by twelve and we find that workers earn $4,681.92 per year on average.
If we divide Tim's $750,000,000 bonus/payout this year by that $4,681.92 yearly Foxconn salary, we get 160,190
My question is: how is Tim so productive that he does roughly 160,000 people’s work, or 1/8th of Foxconn’s total workforce? [2] /s
The contrast between working conditions is also interesting:
“The [Foxconn] factory has no medical facilities or hospital on site, so any injured workers have to be transported to a hospital that’s farther away. Another work hazard is the lack of fire safety: there are no exits or labeled escape routes and no fire safety drills. Similar to other factories that China Labor Watch has reported on, there’s no labor union for the Hengyang workers. There’s a process for filing complaints, but the workers don’t believe it does any good.”
Which seems quite a contrast to ‘Apple Park’ where Tim works.
What makes Apple treat Chinese workers so differently?
[1] https://www.theverge.com/2018/6/11/17448544/amazon-foxconn-w...
[2] https://www.google.com/search?q=how+many+foxconn+employees
But also, that's just federal taxes. California adds 13.3% on top of that (for any income over $1 million, which is most of the income here).
But also, this is a stock grant, which generally get taxed as ordinary income, so I would expect 37% federal, 2.35% medicare, 13.3% California tax, adding up to 52.65% in taxes.
At the very upper margins of highly effective systems, there are some incredibly amazing people: talented, intelligent, workaholic, literally decades of accumulated experience across sectors, relationships, and enough status to be able to lead such an organization.
Cook is up at 5 doing emails, and has been probably for the last 40 years.
Some of these guys are basically 'High Tech Monks' - they have not much concept of an identity outside the bubble of their careers - that's how much they've dedicated.
Assuming that Apple 'creates value for the world' - and on the whole this is probably true, the CEO of a company is going to have considerable influence, and just a few points one way or the other and it becomes clear.
While there are a large number of people in the world who could eventually be moulded into a guy like Cook ... there are very, very few people with 'all the right stuff' so that they could feasibly do his job really well.
That said, Apple's revenue comes from immense market power, there are other entities who do incredible work on that level but work in systems without the power to extract wealth and so are paid less.
One interesting example would be the White House and their staff. By any regular market standards they are vastly underpaid for the level of work they do, but because it's civic work, then their comp structure is designed from a different philosophy.
On the whole I think he's probably overcomped, but the average CEO in America actually doesn't make that much given the dedication and risk. The pay seems high because it's tilted towards the huge paying people at the helm of bigger companies.
It's kind of weird to see some other comments attacking rich people just because they're rich, or completely misunderstanding the role of a CEO.
We've seen the new space race, but that domain seems crowded at the moment.
Use the money to cure cancer or other global health problems? Wealthy people don't tend to spend their money like that (Bill Gates being an exception). Why is this?
Buy influence and dictate politicians in backroom deals? Seems pretty cynical, but a possibility.
Second best thing IMO would be to start some business which is sustainable and doing some social good. For example making e-readers and cheap e-books for the aforementioned children such that their parents can actually buy them. Side note: e-readers are discounted even today (selling at loss) and most money comes from e-Book sales.
well, the owners of apple (the shareholders, via the board) decided that it is justifiable, and fair. Other people, unrelated to this commercial agreement between Cook and apple, have no real say. Nor should they.
Is it worth working whole life to get a lots of game coin in the end of life?
How about working till 40 to earn enough money for the rest the of life?
I also don't think age has anything to do with the desire for success.
This is just once again a case of philanthropic green-washing of what should be actually simply heavily taxed.
Not being snarky but heavily taxed and then what? Expect the government to make the best decision on how to spend money?
At least there is a chance it goes somewhere good now.
You can build a regular home, get paid $5 million for it, the net act was probably negative for the system.
It's the same for companies turning profits: it's entirely possible to make profits in a system while actually shrinking the overall pie. This is common when certain activities are externalized (i.e. pollution).
Capitalism, broadly, does create a bigger pie, but it's a very uneven process and the true value creation doesn't always happen where the value is created. Value capture happens where the power is.
If he had to pay all of this on taxes, society could decide how to use that money and it would be just as much, if not more "a better place".
Somehow the people who didn't have the intelligence and discipline to spend decades successfully doing things that make them rich are so sure that they would be able to do better with their (totally hypothetical) wealth than the people who did.
Everyone loves to claim some kind of moral superiority over the billionaires, but I don't see these critics spending a significant portion of their wealth on charity.
Re: the note above about Foxconn workers, Cooks money comes from the market power developed by Apple which they can leverage on everyone in the system, consumers, workers, suppliers, distributors etc..
So he can leverage against Foxconn workers and then give $1B to charity - or he could not leverage, and double Foxconn workers wages. And that's just his comp, not everything else.
Now - maybe there is a theoretical greater efficiency in his charity work, and of course it's spent on 'his interests' not others, etc..
But the notion of 'giving it away' doesn't make a whole lot of sense unless that giving is frankly more effective than otherwise.
I think Gates Foundation for example is reasonable - a lot of philanthropy is effective in ways that governments and regular private corps are not - that makes sense.
But from a purely charitable perspective, it does seem a little bit odd to accumulate in one column on the ledger in order to put it back in the other column.
Sure thing.
The problem is, many of those people also burn money for yachts and spaceships.
Plus, to me all this charity stuff seems like a buyout. Gates basically made the world a worse place, before he started to make it better.
Sure, but upper-middle-class people also burn money on upscale housing/food/travel etc. The main difference is that billionaires who've signed the giving pledge give a much larger fraction of their income and wealth to causes that help the needy.
Also, it seems odd to lump together spaceships with yachts. When anti-intellectuals attack government funding for NASA, we're the first to defend NASA and all the beneficial progress that comes out of funding cutting edge engineering projects. It's disingenuous to then attack people like Bezos when they do the same thing with their own money.
> Plus, to me all this charity stuff seems like a buyout. Gates basically made the world a worse place, before he started to make it better.
Maybe. I'm certainly not saying that billionaires should be given tax breaks because of their virtuous character. Just pointing out that the needy might ironically be best served by a billionaire tax cut.
But if you think that's always going to be the case, why bother having democracies then? We can return to the tradition of noblesse oblige and let kings and lords take all the products of everyone else's labor and just hope that they'll feel sufficiently obligated to be kind and charitable to the rest of us. There are plenty of people who believe this, so you won't be alone, and I'm sure others will argue we're better off now that the men being rewarded by being allowed to own everything got there by being good at product design and regulatory capture rather than past centuries when they were good at raising armies and taking land from other people.
Also, why would one assume billionaires are better at judging what’s good for society than, say, elected officials or people currently making peanuts working in Amazon warehouses?
One could argue that the bubble billionaires live in is further separated from society at large than that of those people.
Option B) He retires and (maybe) gives it to support HIV research.
So the question is, interest and efficiency.
It's possible in may situations for charitable giving to have greater efficiency, by leveraging the knowledge of the investor, directing the money towards really effective outcomes. Or not. Then there is the public interest.
Option C) Reduce the market power of monopolizing entities, in which case instead of gigantic profits accumulating in specific centres, you have workers, suppliers and consumers getting a better deal across the board i.e. Foxconn staff having more income, consumers getting better prices etc..
I like Option C.
I like Option B when there's effective leadership.
I like Option A when governments are really smart with their investment or redistribution.
Any factory in China can replace most of their 160k employees overnight if they wanted to. How many Tim Cook's do you have lying around?
CEOs don’t get paid so much because they are personally unique. Every human is globally unique; it’s a consequence of how complex humans are.
CEOs have artificial scarcity because of the hierarchical structure of companies. By definition, there’s only one CEO of Apple.
Does that mean that ONLY Tim Cook, out of billions of humans, could have brought Apple to the success they have today? Try this thought exercise: if Tim had stayed at Compaq in 1997 instead of jumping to Apple, what are the chances that he would be CEO today of a Compaq worth $2 trillion?
“How much of Apple’s success is personally attributable to Tim Cook” is a perfectly valid question to ask. Unfortunately, answering it is extremely difficult; you’d need to rerun history for each alternate person. But the weight of a process doesn’t guarantee that it finds an optimum.
CEOs benefit from a human tendency to attribute systemic qualities to individual things or people. It’s the same reason we say a jacket “is warm” even though all it is doing is trapping the warmth that we created ourselves. We say a “successful CEO” instead of “the CEO of a successful company.”
Tim Cook makes incredibly consequential decisions every day. But the reason they are so consequential is mostly because he is the CEO of a huge company.
The negative effect of the current thinking on CEO “scarcity” is visible in the absurdly outsized personal rewards that the CEOs of successful companies get. But it’s even more visible in what happens to the CEOs of companies that are not successful. They still get absurd rewards! Adam Neumann also became a billionaire.
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.
I think that's also silly calculation. Beyond a certain (admittedly unknowable) point, compensation becomes a meaningless number for the individual.
Would Tim Cook "rage-quit" Apple if they could only pay him, say, 75 million instead of 750 million? If yes, then it's pure greed. If no, then it's too much.
Is there something substantive behind that 750 million figure other than very powerful people just paying themselves as much as they can get away with? I think not.
By their perceived scarcity
Chances are that anyone other than Tim could have done just as well.
Still, this is over 10 years, and Apple shares have increased in value by 1900%.
If they were still the same value he’d have gotten 40M, for about 4M per year. Which is much more reasonable.
I still think it’s high, but in line with what others get.
I’d say it would be just about impossible to find anyone else capable giving such a wooden performance and unnatural fake excitement at product announcements. Perhaps a young Point Break-era Keanu? But even then, I’d actually believe when he says “whoa” as a new product is unveiled. So you’re right, irreplaceable.
His pay is an expression of the expectation of a lot of other people. His pay is opinion, not direct value. And you can't pick some random unproven person who may or may not perform as well, and say they are of equivalent OPINION. You could say there's a chance, even a good chance, that they're of equivalent value, but that's a gamble.
This is how weird pay disparities develop. It's not in any way that Tim Cook has personally done things worth that much, or that he's personally pressuring all those in charge of paying him to that extent.
Intentionally or not, the question Tim Cook presents to those with the power to keep or dismiss him is this: How much are you willing to bet that if you lose me, things break and everything sucks?
They are willing to bet $750 million.
That's what happened. How much would you be willing to bet? If it's far less, or if you want to kick Tim out anyway, how many are there of you? Are you heavily outnumbered or are you expressing a common opinion?
When will we learn to stop making these silly arguments about "scarcity" and understand that the only thing that matters is a position of power?
Einstein and Steven Hawking were unique and advanced the entire human civilisation, whats their net work? Is anyone except the mentally ill going to suggest we have more Einsteins that Tim Cook's lying around?
So the less people there are who own the majority of the wealth on the planet, the more that is justified?
So their value is what, exactly? Scarcity by itself doesn't mean anything. There are diseases that are extremely rare, that doesn't make it more desirable to have them.
The rent seeking, wealth-siphoning people do need the people who build the stuff they live off. That's not true the other way around. You don't have to replace Tim Cook, you just have to get rid of him.
(edit: I don't mean Tim Cook personally, it's not intended as criticism of that particular person; but the amount of wealth such people (not to mention the people where the ratio is WAY more off) bind destroys so much productivity in the people that have to struggle as a result, that they would provide more value to the world and the people in it by not existing, than by anything they did or could possibly do)
I can't wait until we are over this hump and our future selves are like 'fuck how stupid were we to let one asshole sit at the top and do nothing but PR while we all beat each other ober the scraps.'
See the rich have figured out that if you pay people almost enough to live they will spend their lives surviving and won't have time to look up and realize what's happening.
Love how you put productivity in quotes as if it's up for debate, and math is now plain silly as it goes against your narrative? Top class.
Original quote by Stephen Jay Gould.
I don't think these people are as special and rare as you think they are.
There are plenty of smart people on the planet.
You do realize that it's possible to disagree with that, right?
All the major tech compagnies have increased their value over the last 10 years, so it's def not because of their incredible CEO.
Or another way to see it. While creating 2 trillion dollars of value for shareholders, he has been paid about 1.5 b. As a shareholder I think that’s very fair compensation.
So relative to value creation, nobody can claim that he’s overpaid. A deeper questions is if it’s reasonable for anyone to own a billion dollars. I don’t think so, but Tim Cook has deserved the money more than most.
That's just obviously not the case unless Tim is the only person working at Apple. All employees contributed that and it's perfectly reasonable to discuss how these rewards should be distributed, even if they should be distributed to shareholders at all.
1. Take a Normal distribution
2. Take 2 pieces of data that are 3 standard deviation from mean, in opposite directions
3. Compare and contrast
4. Keep a straight face while making the argument, use plenty of Logical fallacies to defend your position against logic and reasoning.
5. Alternate between attacking and being the victim.
6. Lather, rinse, repeat
Also, he really cares about making money, so since the workers have no power, why give them anything else than the minimum and get yourself the maximum?
Who cares about some random oversea workers? Their problem, not mine. /s
Before Apple arrived at the current position (2000-2010) they were a small player and it wasn't possible to squeeze parts suppliers. Tim Cook gets an enormous payout because he navigated the company towards flipping this relationship, because he is an expert in squeezing the best quality/price for the parts. Getting the iPhone below $1000 is what gets him his $750mil
The minimum wage is a little lower than that and there are a lot of laws favoring employees which makes it really hard for companies to hire. Just to give you an example, last year the president signed a decree to forbid companies firing people with the excuse of covid, nothing but a populist measure. The result is that no company will ever hire here, which creates more unemployment.
I mention this because giving a lot of rights to employees by law sounds good but I have seen and lived the consequences my entire life.
Should apple on their own pay more to chineese people? I think another comment address that, at the end is an scarcity problem, supply and demand.
My question is: if Tim Cook didn't exist, would any of those Foxconn workers have jobs?
My other questions is: if you put 160,190 Foxconn workers in front of 160,190 development environments, how long before they would randomly re-create the iPhone?
You can't compare salaries, or even value, of people at two massively different levels in the machine. Is Tim Cook "worth" more than 160,190 Foxconn workers? Apple's board and investors seem to think so, and they are Apple's ultimate "customer", being that it is a publicly traded company.
Stock goes up = CEO does good job
Stock stagnates or goes down = CEO does a bad job.
It's an incredibly complex ting to analyze - but how much of company performance is really the result of the CEO, and the CEO alone? Sure, he sets the N-year course of the company, and being the navigator and captain of a ship, you should get some reward if the ship arrives its destination, intact, and on time.
But I mean, how much of Apple company performance is nothing more than just built up momentum? Apple doesn't need to be revolutionary or cutting edge. They just need to adopt working/in-demand products to their own (Apple) domain, and their brand name alone will sell those products. Those Foxconn workers would likely have their jobs, Tim Cook or not in charge. And if not Foxconn, then some other factories and factory workers.
Ok, that's a lot of rambling, but I guess my point is that when you're dealing with a behemoth of a company like Apple, with hundreds of millions of users locked in to their products, it's difficult to credit a CEO alone of the success.
Nobody has been making these productivity claims to begin with, but leftists commonly use productivity vs salary to ridicule CEO compensation.
CEOs are paid for numerous reasons, for example board wants to trust the person with billions worth of assets which makes it sensible to pay certain amount just to guarantee greed doesnt take over, for example. Productivity is one factor but I doubt it is always the most important thing.
Really reminds me of this https://i.kym-cdn.com/photos/images/original/002/147/150/e2c...
though you have a valid point, CEO pay isn't about CEO productivity, it is about corporate productivity.
In fact, anyone here can. Are you as a software engineer making $200,000+ delivering as much value as ~42 of these Chinese laborers at Foxconn? I doubt it.
And people pointing to Tim Cook about how it’s all unfair and everything. Dang I mean the cognitive dissonance and ego to think that you making 42x a worker is ok because the JIRA tickets you addressed add a lot to the bottom line but Tim Cook just makes too much?
Personally I don’t really care. Just find it interesting to see how people justify themselves.
How many Blackberry or Palms phones are being made, if the person at the top screws up, all those workers are out of a job.
Let’s say you paid that $750m in bonuses to those factory workers, what value was created for shareholders? Zero, because Apple doesn’t have a capacity problem producing iPhones…
Who knows how much value Tim Cook created vs some other CEO (he may have destroyed value), we’ll never know, but I think the philosophy is to align incentives between shareholders and the people that are in positions to drive value.
I am sure that if you can replace Tim Cook and work for 390$ per month, owners will happily fire Tim Cook.
Why are we dividing a once-in-10-years (based on targets set 10 years ago) bonus by an every-year salary number?
As in, all your numbers are off by a factor of 10, as far as I can see.
You're asking the wrong question.
It should be: Why is there no disincentive to take unfair advantage of cheap foreign labor?
We live in a global free trade era. Every entity buys cheapest and sells dearest as they can to the best of the information they have.
Labour is just one more thing available for buying.
Not saying this is the best possible humans can do but in the current world economic system it makes no sense for anyone to dis incentivise employing cheaper foreign labour.
How many people can assemble widgets? Billions of people.
How many people can make the correct decisions as a CEO of a large company? Really not many, since you need someone with an IQ over 140, someone with industry expertise, with the right personality, etc. So the supply is low. Also the demand is high, since that person's decision making has multi-billion dollar consequences. Low supply and high demand equal $$$.
If the single person in power does good then everything is good (more for the top people but good for everyone nonetheless). But if they do bad then thousands to hundreds of thousands of people suffer. (Reminds you of monarchy?) And the current way of looking at this is just to hope that the person in power will be happy to do good due to more shares. What would be, in my opinion, better would be to split FAANGS and encourage SMEs (small and medium enterprises)
Would all 160,000 of them put together be able to do a better job than Tim did?
There clearly IS a problem here. It's not just Apple and it's not just corporations, we all (in the West) have to take a bit of responsibility around this.
So for everyone disagreeing with you, I do think you raise/{remind us of} some important ethical issues that do need ongoing and open discussion.
Now a lot of that is due to share prices, and my opinion is share prices are not set by the market any more, are massively inflated to make the US government look good, but that doesn't have much to do with Cook, much like Tesla's share price doesn't have much to do with Elon Musk (I'm serious, the guy is good at marketing, but that only takes you so far).
There's been low interest rates for almost 2 decades now. One of the primary effects of that is inflated share prices.
So, to say the least, this is a complex situation. Comparing Cook's renumeration to a chinese worker is just silly.
Share prices have definitely lost all sense in March 2020. One should keep that in mind when analysing the current economy.
Is it okay to say that it's unjust that a countries must be governed an absolute autocrat appointed by God?
It sure did make for good grandstanding to speak out against the patents and pretend like getting rid of them would change anything about vaccine availability in practice, though, and lots of people jumped up on that grandstand.
So given that dropping the patent protections would not actually help produce more vaccines and given the questions about long-run effects on drug research, opposing the people trying to score easy political points at the expense of actually doing something useful does not seem like a bad choice to me.
They get paid proportional to the impact of their decisions, not in proportion to their scarcity, skill, etc.
If Apple must have someone to make decisions every day that could cost the company millions of dollars, what is the correct amount to compensate that person?
And if Apple were instead a $50M market cap company, would that amount change?
CEO compensation is a combination of "someone has to be in the chair" + "how important are our decisions?" + "how much can we afford to pay."
To reach back to the GP's gripe: if 1 (or even 160,000) assembly workers screw up at their job, it has a much lower impact on Apple as a whole.
Thank you for the reminder.
I'd say that the foundation Steve Jobs left (Mac, iPod, iPhone, iPad) was pretty damn important to that success, considering they still have essentially the exact same product lineup.
Same goes for MS, Windows, Office, Xbox did not all come about after Bill Gates' departure.
1. Wasn't this priced in already?
2. Is it necessary to pay the new CEOs so much?
You argument is actually in opposition to the one I replied to, justifying Cook's renumeration.
Berkshire Hathaway owns a massive amount of Apple and they help appoint/vote members to Apple’s Board of Directors who influence the CEO. Warren Buffett is likely a very happy man with the way Apple performed and I doubt he is concerned about another man becoming super wealthy as long as they become wealthy together <3. I’m sure that’s the whole point.
I’m sure that Tim Cook was already extremely wealthy prior to this, to an extent that would exceed any capability to spend it on himself.
So now that he has an additional 750 million dollars, what is his incentive to continue performing?
He needs another 750 million dollars? For what? Is he supposed to be excited that he might receive some other ridiculous sum of money for which he has no realistic use?
I think that if Biden or even Putin decided to color outside of the lines, they would be removed from their positions without prejudice.
Notice I didn't say "earned" because the entire premise of some is that one cannot morally "earn" a billion dollars - that something is fundamentally broken in our society when wealth can become so centralized.
Some people make fun of the idea that government is a decent decisionmaker for spending money on society, whenever raising taxes on the wealthy comes up. Where do you draw the line? Do you think they currently are taxed perfectly? Do you think no one should be taxed? How would the infrastructure these companies relied on get funded?
Oh, I see you committed another trope of comparing the earnings of anyone on this thread (and about 95% of the country) to a billionaire. The floor for living comfortably, or even somewhat luxuriously, is a much higher proportion of the wages of a middle class household than it is for a billionaire. I make 0.02% annually of just this bonus. Don't you think that makes a difference in the equation?
Hell the whole reason why democracy is thing is because monarchies of yesteryear have proven quite decisively that the ability to raise capital and spend well for society are not even remotely linked.
We need to consider very carefully as a society what the impact of the billionaire class has on how our society develops, and the outsized impacts they can have on democratic processes.
Personally I don’t think having such wealthy individuals is a good idea. Their wealth is so great it’s pretty much impossible for them not to get wealthier, and do it at a rate greater than than the vast majority of people. And their ability to deploy that capital to influence society is scary, effectively taking the role of government to provide social services, and placing it in the hands of a wealth few.
We’ve already seen what more extreme individuals are prepared to do with that power, just a Hobbylobby and David Green’s continued vendetta against abortions and safe contraceptives.
I trust a person who has generated billions of dollars worth of value over a buerocrat who won a popularity contest.
Besides, I don't think it should matter whether or not these people spend their money optimally. They've made this money, it's theirs. Don't take other people's stuff.
> We’ve already seen what more extreme individuals are prepared to do with that power.
Until we leave in a featureless dystopia where all people are perfect clones brought up in an identical environment, there will be power disparity between people. It can be based on inheritance (like in monarchies), or ability to commit violence, or charisma, or political skill, or ability to create value.
Between all these options, I'd much rather live in society where people get to keep the value they have created. It seems to me the most correlated with merit (not perfectly, but better than the alternatives), besides, it is morally right.
Politicians may not be perfect, but they’re much easier to hold to account that high net worth individuals. I personally consider that a killer feature when picking my power brokers.
We already take others people stuff for the public good. It’s called taxes. That money built the roads you use everyday and props up the society you live in by helping to ensure that everyone gets a decent quality of life.
Simple fact of the matter is that no individual has any practical use for wealth measured in billions. It’s wealth that could be better put to use help the poorest in society, and helping us navigate the next hundred years of climate change and associated social unrest.
I am not insisting that people should all earn the same amount of money. CEOs can absolutely provide a unique and valuable role and have more direct influence on shareholder value than almost any other laborer.
I am insisting that attributing all of the change in a stock price to a CEO is not an accurate representation of their role or labor.
When the stock award was granted, existing shareholders agreed to dilute their holdings by allowing the company to issue new shares to Cook. And when Cook sells this newly issued stock for cash, the money comes from new shareholders who want a slice of Apple (or existing shareholders buying more, thus paying cash for the shares they themselves gave to Cook).
If people have money to spend on Apple stock they clearly don’t need it to survive.
Although the question you raise is an interesting one in the sense that many buyers of Apple stock are indirectly depending on it to make a living after they’ve stopped working. For a blue chip giant like Apple, many of the buyers are index funds and pensions where the ultimate beneficiaries are retirees. They literally are buying Apple stock to survive, although through intermediaries.
The particular shares involved _could_ have used a different legal structure, but that's not my understanding based on the articles I've seen about this.
But even in your hypothetical it would not all be capital gains. It would be ordinary income for the value of the shares at the point of the grant, and capital gains for the appreciation since then.
Just throwing money at things does not mean it gets used to actually improve them, unfortunately... The question is when you have gotten to diminishing, or negative, returns.
In my opinion the whole “throwing money at the problem is not a solution” excuse is not enough to justify maintaining status quo. Yes, I agree, governments are the worst at efficient spending. Wasted money. Unjustified spending. Corruption. Nonetheless, we have a problem that must be solved.
If the wealthy have a better idea that involves no money being spent — great. But let’s not pretend like the human cost is going to go on pause while we debate this. Impoverished children will continue to live and grow in environments that do not help them to break out of poverty. What is worse is that the odds are getting worse for them because disparities are getting larger.
He may go down the evangelical Christian path and fund a war of sex, abortions, gays, trans and people’s reproductive rights. That’s not even a hypothetical outcome, there’s plenty of millionaires and billionaires (like David Green) already funding that war.
But also, there's no guarantee that _anyone_ including the government will use money for "good" causes. Bridges to nowhere, military adventurism, wars on drugs, personal enrichment of politicians and government employees, vanity projects of various sorts, the list of things governments mis-spend on is vast.
And of course we don't all agree on the relative merits of different causes.
The argument isn't that he should be paid less, the real argument is that the general day to day employees should be paid more. The money doesn't come out of the CEOs pocket in a publicly traded org.
To be honest, I wouldn't even blink if he was paid 10 times more, and I don't even like him.
If you don't accept that, then I'll just have to disagree based on how I've seen companies are managed, IMHO personalities matter at least that much. But if you do accept that, then that obviously means that a single human being can create value at that scale, as 1% impact on Apple's growth over 10 years would be something like $20 billion. Being in positions with extremely high leverage means that your decisions have extremely high impact on value. Of course, there are also opposite examples of CEOs who have personally destroyed billions of value through their decisions.
One person will be leading the team. That does not mean that it is they who creates that impact.
IIRC many academics have studied ceo comp and found it outsized any evidence based justification of influence (such as compared to if a lower payed ceo was at reigns).
Besides, the beautiful thing is that it's the people whose money is on the line that are deciding to pay him so much money. If they thought he wasn't worth a lot of money, then they would have got rid of him.
I think every single day he makes decisions which could destroy $750m or create $750m. He could wipe billions with a bad tweet. If they greenlight (or cancel) a product that increases revenue 0.1% and that single decision could make (or loose) the company billions.
If a board thinks a CEO will get 0.1% better returns than the next best option, that is worth billions of compensation.
To which?
I think we should encourage/require government spending on things that are actually useful (and I acknowledge that there is wide-ranging disagreement on this criterion) and fund such spending adequately.
At the same time we need to have reasonable accountability for governments doing stupid things with money, notice when it's happening, and make it stop, redirecting those funds to something productive. Whether that happens via lower government revenues or reallocated government spending depends on whether there is something productive the government can spend the money on.
The things that you list, and many you don't (quality schools, both physical plant and teacher quality, libraries, parks, clean water, free school lunches, free preventative medical care, etc, etc ) generally pass the "is productive" smell test until proven otherwise; the burden of proof there should be on critics to prove that the investment is not being done in a useful way. That said, once that burden of proof is met, action needs to take place to remedy that.
> In my opinion the whole “throwing money at the problem is not a solution” excuse
You're putting words in my mouth here. For a lot of these things, throwing money at them is a _necessary_ but not _sufficient_ condition for having a solution. If you don't fund your schools adequately they will be bad, but if you just throw money at them and it gets misused in ways that don't advance learning they will also be bad. The whole "there's a whole warehouse of unused computers in that school district" thing is not _common_, but it's also not unknown when it happens it's really bad and needs to be fixed. Both in terms of the immediate problem and the bad incentives that led to it.
So just saying "allocate money to this" is not the end of the road. You have to then make sure the money gets used sanely.
It _was_ an incentive for future performance. The shares for this reward had already been set aside years in advance incase he hit his share price targets —- when they were worth much much less.
Why quibble about such a small amount? You’ve paid 0.03% of your current Apple holdings for a decade of growth creating value many orders of magnitude greater.
I am not quibbling about THAT amount.
I am quibbling about the fact that he (like other tycoons) sits on top of a giant pyramid of human labor, the majority of which earns just enough to make ends meet in a low cost of living country.
Sure, Tim Cook is a good person and deserves reward for what he has done and it should be "a hellava lot". At some point, however, that reward starts becoming absurd and nonsensical.
Disregarding market cap as not real money would be like disregarding your checking account as not real because the bank operates a fractional reserve.
Then again, I'm not sure it makes more sense to compare stock-based compensation with revenue than with market cap.
If you are already rich enough to retire many times over, why should you keep working on something that doesn't move the scale of your money (and consequently power and ability to do other things, including starting a new business that could disrupt your previous business?)
Think of it this way: a lot of the money that is being paid to Tim Cook is to ensure that he doesn't go to work somewhere else.
Could he turn Apple into an online education platform that leverage open source platforms and open hardware to make it as affordable as possible to everyone? No, he can't. Apple depends on the brand of exclusivity and premium products.
Need I go on?
Would he have reached/pushed for a particularly aggressive goal for less? Could someone else have achieved that goal for less?
No doubt there is some element of personal relationships between everyone in the compensation committee and the ceo.
I think these numbers are set by compensation committees of the Board of Directors using consultants that analyze other private and public company data. So if you have some small number of greedy individuals pushing for massive compensation based on stock performance, then that trickles through the industry. Cook doesn’t have to be greedy to just not want to be underpaid relative to market, even when the market is set by a few greedy individuals.
It is a race to the top. Solvable via regulation if anyone really cared, but I suspect no one really does.
Well put. I suppose no one cares enough because, after all, there aren't THAT MANY billionaire tycoons. And, sure, they perform a valuable function in putting many people to work and giving away millions of turkeys on thanksgiving, etc.
But now, we're in an era of billionaires racing each other into space and compensation levels which are "astronomical". It's in some ways a repeat of the age of robber-barons except I don't see it slowing down any time soon. Now I wonder what ended "the gilded age" ~100 years ago? Oh yeah, world war + economic crash.
Yeah, he doesn't need it, but I am happy that he has it. He clearly is a guy who can deliver value for society and I don't think he is going to use the money stupidly.
Would I pay someone $750m to run a company? Definitely not. However as a stock owner I would pay using stock compensation, and that's what happened here. The whole idea that the owners are paying in cash is wrong to begin with, as that isn't the case.
I disagree.
> Relative to value creation, I bet he’s very low in the CEO compensation league.
You really think Tim Cook has created the value of the company? I very seriously doubt it. At the risk of whataboutisms: what about the engineers who did the work? What about the factory workers who did the work? What about the contractors who did the work?
Tim Cook didn't create the value. He created a contract. That's all.
OK then.
If that were true then he'd be paid far less. Tim Cook does not provide value to Apple to the tune of billions of dollars. The people who work for Apple do.
> how difficult they are to replace
What would be difficult about replacing Tim Cook?
It would not be hard to believe that Tim Cook's decisions had a larger impact than that on Apple's market cap because he has extremely high leverage as the CEO.
Otherwise, 750 million dollars is probably more than what anybody needs.
It reminded me of SpaceX almost dying in the early days because even Elon Musk is not made out of unlimited money.
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.
In any case, it's a sad state of the world when even the CEO of the richest corporation in the world can not be allowed to be interested in anything else that is perfectly aligned with the company's goals.
But anyway, you asked if there is any kind of job that he couldn't do at Apple. I just gave you a couple of examples. You didn't specify that it had to me something that he would be personally interested in doing publicly. I don't know him personally nor I care about him (or Apple) to spend more time and thought about the matter.
But this is getting so much in the realm of the hypotheticals, I really don't care about the argument either way.
And that's with competent management. (Let's not talk about the multiple management idiocies that happened at HP.)
Apple is now one of the longest lived tech corps. IBM is older but a shadow of its old self. MS is a year or so older, but the rest of FAANG are relatively new.
Cook has kept the plates spinning and turned Apple into a giant revenue machine with a strong R&D back-up. I don't think that's a small achievement, and even if he's helped by the board and senior execs - which of course he is - it's still easy to underestimate the skill that goes into that.
Having said that - he's also turned Apple into a somewhat boring company. The products are nice-looking and usually functional but not particularly thrilling. They feel overpriced. And I suspect some opportunities in home automation, user content creation, and health have been missed.
Cook's Apple is an all-American bureaucratic behemoth - a kind of modern General Electric which keeps churning out high levels of competence, but not much inspiration or excitement, and not a little frustration and irritation over nickel-and-diming of users and developers.
Someone else might not have made Apple as profitable, but personally I wouldn't have minded a friendlier and more inventive and adventurous company.
I do wonder how long it's gonna last.
I suppose at some point all companies die/fade into obscurity/are different companies in all but name; maybe in 2080 or whatever we'll be able to say - ah, yep, knew it, Apple was for the dogs as soon as Jobs left, was only a matter of time!
Any decisions that would affect their trajectory will get a ton of deliberation from a lot of smart people; i.e. there wouldn't need to be a ton of input or ingenuity from the CEO to see returns like those from Apple, imho.
Not to say that Cook isn't great or that it wouldn't be difficult to achieve that success.
But that sure didn't last.
Of course you can argue that the wrong leader would have torpedoed the company.
Did you see what happened to Apple after Steve Jobs got fired? Have you seen what has happened to great civilizations after the roll of monarchical dice or even a democratic election?
Have you ever met a bozo? They exist and there's more of them than there are sane people.
I think it’s generally just fine unless the incoming new CEO is determined to suddenly do everything different.
The history of Apple CEOs indicates otherwise.
Your comment is typical from someone who thinks themselves to be smarter than the whole board. Or the investors that never challenged Tim's management, Or all of Apple's upper management who would love to find a way to take his spot and wouldn't care about exploiting some of Tim's weaknesses to dethrone the king...
The trick would be to allow workers to capture all of their productivity rather than have a large amount of it syphoned off by owners.
Tim Cook working for one day could easily have a larger impact than most people will have in their entire lives because he has extremely high leverage.
Is it fair? Absolutely not, but life is not fair. I don't understand what moral obligation society should have to base compensation on productivity.
PS: you could argue that Tim Cook is far more productive than everyone else because he produces far more results than everyone else.
Of course. "Pay by productivity" does not mean "pay everybody the same per hour of labor". Cook's output has greater influence on the company than any (or perhaps almost any) other employee at Apple. He should be paid commensurate to that output.
So sad that any other system is completely impossible
Exactly. And history is pretty clear that nearly everyone is worse off when society decides how to spend money instead of letting owners decide how to spend money. It's why every first world economy has a massive dose of capitalism and a tiny dose of socialism in their GDP. And why a significant part of the worst economies of the world don't.
>The idea of the specific "rightful" ownership of money we have today is not universal throughout history
Yet the poor (and pretty much everybody else too) in most of the world, if not all, today are vastly richer than the poor of the past.... Maybe there's a reason the world has moved away from the economic systems of the past?
I believe most of Apple's value is from delivering a high degree of consistency and polish; owing to its culture of relentlessly developing the UX of their products.
Therefore the CEO's primary roles at Apple would be to maintain that culture, steer the ship into new segments, and discern when the public will care about those segments.
I think Cook has done a decent job of that.
Making it all possible with RnD and supply chain is another story, but also where Cook is known to excel so maybe I'm underselling him. Jobs had Cook so presumably Cook would find a Cook if he weren't Cook.
I don't know much about Microsoft but Balmer was definitely taking over a different beast than Cook.
How would you even compare that? How would you even measure your productivity? Lines of code? Tickets closed?
We can't even compare "productivity" in our own "profession", much less between different ones.
Fuck, even to think in terms of "professions" today seems so anachronistic... some of the best people I worked with were never trained, should we disregard them and go back to a world of credentialism and guilds?
> The trick would be to allow workers to capture all of their productivity rather than have a large amount of it syphoned off by owners.
More likely, entrepreneurs would simply automate the shit of out of their work and outsource what is not automatable to other service providers. And all of the "workers" who can not think for themselves will be left jobless and crying for someone to help them.
How would you measure your scarcity? It is similarly difficult. "Workers are paid according to their productivity" does not mean "there is a fixed mechanical pay formula based on lines of code or something".
> More likely, entrepreneurs would simply automate the shit of out of their work and outsource what is not automatable to other service providers. And all of the "workers" who can not think for themselves will be left jobless and crying for someone to help them.
If entrepreneurs can already do this, why the fuck are they paying so much money for engineers in the bay area? Wouldn't "can be replaced by machines" be the literal minimum possible scarcity?
Because these people are scarce and companies can't automate that type of job. Yet.
But, just look at what happened when Facebook decided to not pay SF salaries to those that moved out of the Bay Area. That was just Zuck saying "if you want be anywhere in the world to work here, then I can also look anywhere in the world to hire people", which instantly made them realize that they are not that scarce anymore.
> How would you measure your scarcity?
- My employer finds someone that can do my job for less money than I am asking, so they replace me. I am not as scarce as I thought.
- Some other company will offer more money to do the same job I am doing currently. I am more scarce than I thought.
- I work on new things, show experience or an ability that not everyone in the company can - let's say I am now able to manage a team of developers or I can work on both the backend and do devops. My scarcity increased.
It's not that hard.
What is corruption?
A software engineer doing the same work gets paid way more in SF than in London. State policies prevent free movement of labor between London and SF. State policies do not prevent free movement of capital across nations, as clearly seen by the number of megacorporations actually owned by weird subsidiaries in strange locations for tax purposes.
As for software engineers, recently so many people here are up in arms against the return to the office... But still want to get paid 3x the guy from Indonesia. I'm looking for them replaced with cheaper developers, and what they'll think then about the remote work.
- Because it is not on "us" to try to change this at an universal scale. I am all for people that believe in communist ideals and go to live on their own with like-minded people. The problem is those that take this to totalitarianism and think something like "communism can only work if it everyone does it"
- Because history has witnessed already many people that tried to change this reality without ignoring scale, and ended up causing more problems that solutions, destroyed more wealth and made the world worse than they started off.
I assumed you meant something along the lines "pay everybody the same per hour of labor" since that seems to be how most people describe productivity.
Not everybody is equally productive. Somebody who has more skill or knowledge in a profession like software engineering will be considerably more productive than a less skilled engineer. Among leftist circles, I think you'd be very hard pressed to find people who describe productivity as literally just "number of hours worked".
How many software companies got off the ground, hired people, PAID SALARIES, yet never got to see themselves become profitable?
How many companies would not even have existed if there was no risk investment done?
But you say that if we paid by productivity then entrepreneurs would simply bypass those people. Whether that is possible is independent of how we determine compensation.
> It's not that hard.
You allow yourself to provide a very loose mechanism for roughly determining scarcity but demand a very precise mechanism for determining productivity in the previous post. This is an unfair comparison.
No. Entrepreneurs will bypass them anyway, whenever possible and whenever profitable. The difference is that your idea of "paying by productivity" would make cheap labour expensive, consequently increasing the profitability of automating work process and accelerating the pace of replacing labour.
> You allow yourself to provide a very loose mechanism for roughly determining scarcity but demand a very precise mechanism for determining productivity in the previous post.
No, I am being descriptive of the current reality. You want to be normative about your idealistic method. So, yes, you have the onus of coming up with a system that could replace the existing one and be at least as effective.
