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Apple chief executive Tim Cook gets $750m payout
- ausudhz 5y agoGood for him?
- shin_lao 5y agoYes good for Tim. He is just capturing a small percentage of the value he created.
- Hokusai 5y agoI thought that CEOs of American companies were legally required to maximize profit. Reducing Cook's salary sure whould increase profits.
- uuddlrlr 5y agoDefinitely seen companies do worse to try getting a couple million dollars.
- amelius 5y agoHow do you know that for sure? With less compensation perhaps he wouldn't work as hard.
- blunte 5y agoI'm not arguing for or against his payment amount, but I find it hard to believe someone would work less hard if they were told, "You'll only receive an extra $200 million in 10 years, in addition to your normal salary, instead of an extra $750 million." Who would say, "Nah, sounds like a lot of work for only $200 million extra. I'll just coast, thank you."
- unmole 5y ago> I thought that CEOs of American companies were legally required to maximize profit. They are not. Management of companies has the fiduciary responsibility to act in the best interests of shareholders. That does not imply a legal requirement to maximize profit.
- R0b0t1 5y agoA judge is also unlikely to assume the randos on a board are better at upholding fiduciary duty than the company executive. The case that created this BS is one where Henry Ford said literally nothing in his defense and lost.
- djbebs 5y agoWhat are yoy talking about? The "randos" on the board are the ones representing the shareholders...
- R0b0t1 5y agoYes, but are they subject matter experts? The CEO is more likely to be an expert than they are, that's why the CEO is the CEO. The board members' only qualification is having money.
- Ecstatify 5y agoYou have to pay for talent. How many people in the world have the talent to run a $2.4 trillion company effectively.
- lexapro 5y agoProbably not just this one guy?
- amelius 5y agoIt's easy to find 10x programmers in comparison. 10x CEOs are much harder to find.
- consp 5y ago> 10x CEOs are much harder to find Considering how much CEOs who lose massive a mounts at companies get rehired elsewhere I seriously doubt that in most cases a monkey with a typewriter would do worse. Plenty of possible CEOs to hire and easy to find, they just don't have the connections to get hired because they are in the Zoo. (/s if sarcasm was not effectively implied)
- amelius 5y agoBut he didn't lose massive amounts. He (well, he and his company) made massive amounts.
- Tenoke 5y agoNo but the other guys at that level also already have offers for very high amounts so you can't get any of them if you aren't paying large sums.
- blunte 5y agoNo doubt he's done a good job, but he also inherited a great company which was obviously already full of great people. He has done surprisingly well during his time there, but Apple has shifted more into a monopolistic, protectionist company with declining software/hardware quality compared to when Steve Jobs was running it. From an investor standpoint, he's done quite well. And since his reward is based on stock value, I'd say he's earned it. But I wouldn't say he's 100X or more talented than an average experienced business leader.
- eej71 5y agoI think you are thinking of the general maxim that the goal of executive management of a corporation is to maximize share holder value in the long term. As with most maxims, there is a lot of wiggle room.
- deleted 5y ago[deleted]
- em500 5y agoThat's apparently a popular misconception: https://medium.com/bull-market/there-is-no-effective-fiduciary-duty-to-maximize-profits-939ae50d0572 https://medium.com/bull-market/there-is-no-effective-fiducia... In this case specifically, it's very unlikely that any group of shareholders could succesfully sue the Board about this compensation package.
- yarcob 5y agoProbably interesting in relation to the app developer settlement, where Apple set up a fund of $100m to support small US app developers.
- danpalmer 5y agoThis is a lot any way you look at it, but before everyone jumps in to compare to other things, it's worth noting that this was agreed 10 years ago, and the value is down to two things: 1) hitting targets that earned him this amount, and 2) the amount being in terms of shares, not dollar value, which he has essentially 10x'd the value of in his tenure. 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"!
- Bud 5y ago"Roughly doubled"? You might want to double-check your research. Apple is worth about 11x what it was worth 10 years ago.
- danpalmer 5y agoThanks, misread the 3 years in the article. Have edited.
- user-the-name 5y ago> which he has essentially 10x'd the value of in his tenure Think there might have been one or two other people involved in that. Maybe even a few more than that.
- danpalmer 5y agoI think you can say that about anyone who makes anything based on work from anyone else. While it's important to recognise those others (as those at Apple with stock based compensation have been), I don't think it nullifies the point because they didn't do all the work themselves.
- jaggederest 5y ago
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- snicker7 5y agoI feel bad for all those Uyghur slaves toiling in Apple's supply chains. But if it makes Tim even slightly wealthier, it is all worth it. :D
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- intricatedetail 5y agoThis is obscene. He didn't make any iPhone or other device nor worked behind the counter, yet he takes the money that could have been redistributed among the workers. Despicable man.
- b-lee 5y agoSo work is only working behind the counter for you?
- intricatedetail 5y agoI am saying his work is not worth this much. He is only able to get this money off the workers because of his position.
- PeterisP 5y agoThe money that could have been redistributed among the shareholders - in the absence of this agreement, it would have been dividends or company cash i.e. share price, not redistribution to other workers. And it's not something that Cook took, it's something that was given to him 10 years ago as part of his compensation package (and at the share prices of that time the stock grant would be $75m so $7.5m per year which doesn't seem that outrageous to me). 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.
- pdpi 5y agoThis "despicable man" is the CEO who blasted a board member for suggesting that he should prioritise profitability over sustainability. https://fortune.com/2014/03/01/apples-tim-cook-picks-a-fight-with-climate-change-deniers/ https://fortune.com/2014/03/01/apples-tim-cook-picks-a-fight...
- whoaisme 5y agoI dislike Steve jobs as much as the average person but his answer to the succession question was probably the best decision he ever made.
- timwaagh 5y agodid apple create these shares or did they buy them?
- whack 5y ago> In 2015, Mr Cook said he would give away his entire fortune before he dies, and is known to have donated tens of millions of dollars to charity. 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
- EllDW 5y agoAssuming they're telling the truth and will donate their fortunes you're then reliant on their whims as to what gets the money.
- toper-centage 5y agoHow did billionaires amass that much riches? How much environmental distrution, erosion of democracy and workers rights, and general negativity brought them up to this level? Giving back a few million to the community does not offset that.
- k__ 5y ago"If every person used their resources for the best of society, the world would be a better place!" 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.
- Ensorceled 5y agoAnd then Gates fought against dropping COVID vaccine patent protection for months. Old habits die hard, I guess.
- cjoh 5y agoI am more interested to know how much of that payout he will be taxed on
- webinvest 5y agoIf it’s mostly long term capital gains, he’s in the 20% LTCG tax bracket.
- bzbarsky 5y ago23.8%, because he would surely have to pay NIIT as well, right? 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.
- s1artibartfast 5y agoI think medicare is capped after your first 140K of income, so it is a rounding error. Tax is still a huge cut.
- bzbarsky 5y agoYou're thinking social security. Medicare is very much not capped, and in fact you only hit the 2.35% rate after 200k individual or 250k family income; it's 1.45% before that (for the employee side).
- s1artibartfast 5y agoYou are correct, thanks
- webinvest 5y agoI’d bet money that Apple’s or Cook’s could afford an accountant that is smart enough to structure the deal so that it would be all long term capital gains instead of all ordinary income. Just say that he received the shares a year ago or when he started but those shares weren’t vested until now. Then it would be 23.8% federal instead of 37% federal… Although our government is broke and needs that extra tax revenue.
- jl6 5y agoThis actually seems like a totally appropriate reward for 10x’ing the value of the company. Compared to the total value of the company, if anything it seems small.
- tgv 5y agoIn unrelated news, Apple Stock went down a sharp 11% when the company announced that it would hand out $750M to workers at its factories.
- Grustaf 5y agoWhen was this?
- mynameismon 5y agoFrom what I could decipher, sarcasm.
- vmurthy 5y agoFrom the article : "In 2015, Mr Cook said he would give away his entire fortune before he dies, and is known to have donated tens of millions of dollars to charity". 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 :)
- spottybanana 5y agoHe is already making society a better place by making products and services that people value. Charity isn't the only option for that.
- jollybean 5y agoHe is only making society better if the value he is creating is larger than the value he is extracting. 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.
- diordiderot 5y agoJust like the Sineloa Cartel! People would die to get their hands in their product.
- DasIch 5y agoRich people spend money on charities they like. They change society the way they want it to change that does not necessarily make society a better place nor is it necessarily what most people want. 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".
- golergka 5y ago
- jbirer 5y agoBetter than Mozilla CEO getting a raise while Firefox market share has started tanking.
- c8g 5y agooff-topic What people exactly do with their billions of dollar in their 60s or 70s? 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?
- Oras 5y agoI can't speak for him, but I would highly doubt that his motivation was money. Fulfilment from achieving success cannot be narrowed down to money only. I also don't think age has anything to do with the desire for success.
- Thaxll 5y agoNo matter how big is Apple is today, $750m is an obscene amount of money. Don't understand people that can justify that.
- chii 5y ago> Don't understand people that can justify that. 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.
- SamoyedFurFluff 5y agoI think the broader society does always have a say into the private agreements of individual entities and corporations. This is called labor law. So technically, they do have a say. Of course I highly doubt that society would be willing to pass a labor law to limit the bonus of CEOs. But I don’t think that’s because society doesn’t have a say; I think that’s because society broadly doesn’t consider this objectionable enough to forbid.
- PeterisP 5y agoIMHO it does matter how big Apple is today, because that's the appropriate context, that's the size of the pie that's being divided and the size of value creation for which he's being compensated. The payout is less than 0.05% of the value increase of Apple under Cook's leadership. Many other people played a hand in it, but it seems to me quite plausible to attribute at least 1/1000th of that growth to Tim Cook personally.
- malshe 5y agoIf his compensation is tied to the market value of Apple, of course it matters how big Apple is. If it were worth $5 trillion today, his compensation would have been double.
- papito 5y agoThat is penis rocket money right there.
- beckman466 5y agoSo according to this 2018 article by The Verge [1], Foxconn workers producing iGadgets in China earn on average $390.16 per month. 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-worker-conditions-benefits-stripped-low-wages-chinese-factory https://www.theverge.com/2018/6/11/17448544/amazon-foxconn-w... [2] https://www.google.com/search?q=how+many+foxconn+employees https://www.google.com/search?q=how+many+foxconn+employees
- zpeti 5y agoAs a comment already says, this was due to meeting targets agreed 10 years ago. 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.
- axelroze 5y agoSpeaking of Tesla's share price. It has Price/Earnings (PE) ratio of 1095 while a normal ratio is around 5 to 10, perhaps around 20 for tech companies. Apple's PE is 29. Share prices have definitely lost all sense in March 2020. One should keep that in mind when analysing the current economy.
- jstx1 5y agoGood for him. Pretty cool to see especially given that paying him these shares was agreed 10 years ago and Apple stock has crushed it since then. 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.
- deleted 5y ago[deleted]
- whitehouse3 5y agoThe weirdness to me is judging whether the ideas expressed across this thread are altruistic or just garden variety envy. Maybe the answer is “both/and” depending on one’s perspective.
- papito 5y agoYes, in a company that operates in the United States, a country that provides the talent, capital security, infrastructure, and the consumer base to make this possible. And yet, how much in taxes will he pay? I know, this is HN - even 1% would be robbery.
- nbzso 5y agoI know that most of you will not understand, but every problem that I have with Apple started in the moment when this guy become CEO. 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.
- artembugara 5y agoCan we just let Apple shareholders decide for themselves how they want to spend their money?
- code_duck 5y agoThat’s my question. How does this benefit Apple as a company or shareholders?
- webinvest 5y agoThe shareholders decided that providing a share incentive for raising the share price higher than other company shares was a great way to align the interest between the shareholders (who own the company) and the CEO. It’s as simple as that.
- code_duck 5y agoWhy does Tim Cook need an incentive? It seems like he's plenty motivated already and there's very little chance he might leave for a different position.
- webinvest 5y agoBecause otherwise he might decide that Apple’s share price doesn’t matter to him and then Apple shareholders would be sad or mad when it doesn’t go up. Aligning interests is a best way to get the outcome you want from any person. 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.
- code_duck 5y agoThis is a reward for past performance, not an incentive for future performance. 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?
- kenneth 5y agoGiven that Apple's stock price is up about $2.2 trillion since the award it doesn't seem to out of place for him to capture 0.034% of that value.
- humppadumppa 5y agoI just simply cannot agree with anyone who believes that 10 years of work is worth $750 million. Even if the thinking is that doing the correct decitions is worth much more to the company, I will still just simply refuse to accept that this level of compensation is right on the larger context of human society.
- jollybean 5y agoWhile this level of pay definitely needs to be scrutinized, and I personally am not sure that Mr. Cook is worth quite that, it is actually possible that people could be worth that much. 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.
- s1artibartfast 5y agoWhy not. Efficient companies create value out of nothing, certainly it is better for society than the counterfactual of them not creating value.
- beaunative 5y agoSo many sour comments. When Tim Cook took the place of the legendary you know who, every reviewers is worried about Apple's future, and Tim's not doing a so bad job after all. Most of his investments paid off, and Apple's performance has remained stable and has grown. 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.
- swiley 5y agoIMO: he’s doing an awful job. His mismanagement of iOS will result in regulation that forces them to give up the abuses which made it (and by extension Apple) so profitable.
- black_13 5y agoAnd he will pay no taxes on it I estimate.
- MikeLumos 5y agoYou estimate wrong. Top 1 percent of earners (with incomes over $540,009) pay over 40 percent of all income taxes.
- thehappypm 5y agoEdgy but this is a simple taxable situation and downright impossible to avoid taxes on it. California is going to make a nice little amount of money here as is the IRS.
- Andrew_nenakhov 5y agoWhen will the people understand, that if you force the equality, it'll result in mediocrity? 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.
- q3k 5y ago> This was the first thing done when Bolsheviks came to power in Russia, I'm not kidding. All in the name of equality. You should see what some states have done in the name of freedom and democracy elsewhere
- mFixman 5y agoIs it possible to have a debate about CEO payout without the dumb comparisons with the Soviet Union? 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?
- Andrew_nenakhov 5y agoNo, because when you appeal to how unjust it is for CEO to be paid much more than workers from a factory, you are repeating the key piece of Bolshevik propaganda.
- mFixman 5y agoThe necessity of separation between of church and state was also a key piece of Bolshevik propaganda. Is it okay to say that it's unjust that a countries must be governed an absolute autocrat appointed by God?
- therealdrag0 5y ago
- GDC7 5y agoWhen did HN start hating on people like Tim Cook instead of having the arrogance and the self-confidence to think that someday you'd be making that sort of coin?
- unethical_ban 5y agoRelevant (to me): This is due to the deal Apple made with Tim a decade ago. I took a screenshot of HN the day Jobs died. I also have the WSJ from that day, but it's buried in a box somewhere. https://ibb.co/g66DKhx https://ibb.co/g66DKhx
- iambateman 5y agoHow many of the grumpy “he shouldn’t be paid that much” comments were written on an iPhone?
- axelroze 5y agoBingo. All of Apple's share price and consequently of Tim Cook's income here comes from people paying money to Apple and boosting the earnings. Don't like Tim Cook earning a lot of money => Don't buy any Apple products or services. Simple as that.
- CodeGlitch 5y agoPerhaps it's takes a certain breed of people, but I'm not sure what I would DO with $750m. Buy a super-yacht I guess? Invest the money and make 10x more of it? But then what? 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.
- axelroze 5y agoIf I had $750m (or any more sizable wealth really, even 10m would be enough for where I live), would be to improve wealth inequality from the roots via the boring and slow route. Better education for children (equipment, teachers, etc), regular food on the table (big problem for many people), counselings and medicine for abusive parents. 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.
- antimora 5y agoIsn't this taxes at 40%+ when this is paid?
- doctor1 5y agoLook who’s Cooking