Apple chief executive Tim Cook gets $750m payout

https://www.bbc.com/news/business-58352098

by shivbhatt • 5 years ago

123 320 5 years ago

bbc.com

ausudhz• 5 years ago

Good for him?

shin_lao• 5 years ago

Yes good for Tim. He is just capturing a small percentage of the value he created.

yarcob• 5 years ago

Probably interesting in relation to the app developer settlement, where Apple set up a fund of $100m to support small US app developers.

danpalmer3• 5 years ago

This 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• 5 years ago

"Roughly doubled"? You might want to double-check your research.

Apple is worth about 11x what it was worth 10 years ago.

danpalmer3• 5 years ago

Thanks, misread the 3 years in the article. Have edited.

user-the-name3• 5 years 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.

danpalmer3• 5 years ago

I 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.

ZephyrBlu6• 5 years ago

And a lot of those people would have also had stock based compensation.

fighterpilot3• 5 years ago

Sort of like how Michael Jordan's teammates helped him in the Bulls. But you would be a damn fool to not pay him to ensure that he doesn't go anywhere.

snicker7• 5 years ago

I 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

intricatedetail2• 5 years ago

This 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• 5 years ago

So work is only working behind the counter for you?

intricatedetail2• 5 years ago

I am saying his work is not worth this much. He is only able to get this money off the workers because of his position.

PeterisP4• 5 years ago

The 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• 5 years ago

This "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...

timwaagh• 5 years ago

did apple create these shares or did they buy them?

whack2• 5 years 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• 5 years ago

Assuming 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• 5 years ago

How 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__• 5 years 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• 5 years ago

And then Gates fought against dropping COVID vaccine patent protection for months. Old habits die hard, I guess.

whack2• 5 years ago

The problem is, many of those people also burn money for yachts and spaceships.

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.

Kuinox• 5 years ago

If you force them to donate it's now called a taxes and government fund research.

breakfastquark• 5 years ago

I see your point and I somewhat agree. But this is based on the assumption that only upper-middle-class engineers work for Apple. However, the people in factories producing these products for Apple definitely deserve a raise. Income inequality should be fixed throughout the supply chain and not only benefit the upper-middle-class.

Someone• 5 years ago

There’s nothing preventing “someone in the 75th percentile of USA income” from signing that pledge, is there?

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.

nonameiguess• 5 years ago

The world can end up better off in certain cases of one person controlling huge amounts of resources rather than collectively deciding what to do with them.

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.

jollybean4• 5 years ago

Option A) The money is taxed and spent on HIV research.

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.

therealdrag03• 5 years ago

If the middle class don’t have money to spend, then that would create more needy people cuz there won’t be jobs. Be careful of trade offs

cjoh• 5 years ago

I am more interested to know how much of that payout he will be taxed on

webinvest7• 5 years ago

If it’s mostly long term capital gains, he’s in the 20% LTCG tax bracket.

bzbarsky9• 5 years ago

23.8%, 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.

gok2• 5 years ago

Compensation like this is considered regular income, so as Tim is a California resident over half will be owed as tax immediately.

jl6• 5 years ago

This 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• 5 years ago

In unrelated news, Apple Stock went down a sharp 11% when the company announced that it would hand out $750M to workers at its factories.

Grustaf7• 5 years ago

When was this?

vmurthy2• 5 years ago

From 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 :)

spottybanana3• 5 years ago

He is already making society a better place by making products and services that people value. Charity isn't the only option for that.

jollybean4• 5 years ago

He 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.

diordiderot2• 5 years ago

Just like the Sineloa Cartel! People would die to get their hands in their product.

DasIch3• 5 years ago

Rich 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• 5 years ago

Society had already decided how to use that money when it's members were buying Apple products.

Invictus0• 5 years ago

Why this criticism? Is HIV research not a good enough cause for you? Much better than a 10 billion dollar airport or 15 billion dollar Olympics in my opinion.

MikeLumos5• 5 years ago

Why does everyone think that they know better how to spend other people's money than the people who have earned it?

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.

jollybean4• 5 years ago

What is the point of grabbing surpluses and then handing them back?

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.

eliaspro• 5 years ago

And during his lifetime, this money is locked away, only accessible by him, taken out of circulation and thereby not adding any worth against ever-growing inequality, supporting economic prosperity or tax-funded investments.

This is just once again a case of philanthropic green-washing of what should be actually simply heavily taxed.

Aeolun6• 5 years ago

Lol, you think the money is any less locked in Apple’s coffers?

At least there is a chance it goes somewhere good now.

webinvest7• 5 years ago

That’s not how checking accounts, savings accounts, or shares of stock work. It’s only how physical dollars in your wallet work.

gomox• 5 years ago

Taken out of circulation? The money will surely be invested into the economy where it will very much fund (profit motivated) initiatives.

vmurthy2• 5 years ago

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?

azth• 5 years ago

The solution is Zakat. Look it up.

cuillevel3• 5 years ago

Why not just pay taxes instead? That's literally paying it back to society.

sumedh2• 5 years ago

To fund wars in Afghanistan and Iraq or some other country?

purple_ferret• 5 years ago

He's got no kids so, where else would it go?

jbirer• 5 years ago

Better than Mozilla CEO getting a raise while Firefox market share has started tanking.

c8g• 5 years ago

off-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• 5 years ago

I 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.

Thaxll2• 5 years ago

No matter how big is Apple is today, $750m is an obscene amount of money. Don't understand people that can justify that.

chii• 5 years 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.

SamoyedFurFluff2• 5 years ago

I 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.

PeterisP4• 5 years ago

IMHO 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• 5 years ago

If 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• 5 years ago

That is penis rocket money right there.

beckman466• 5 years ago

So 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-w...

[2] https://www.google.com/search?q=how+many+foxconn+employees

zpeti• 5 years ago

As 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.

axelroze5• 5 years ago

Speaking 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.

spottybanana3• 5 years ago

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

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.

mellavora• 5 years ago

Wait-- so paying large amounts stops greed from taking over? I wonder how that is working for them.

though you have a valid point, CEO pay isn't about CEO productivity, it is about corporate productivity.

akie• 5 years ago

You are justifying someone being paid $750m. No one needs that much money. No one. Why are you defending this? It's obscene.

Really reminds me of this https://i.kym-cdn.com/photos/images/original/002/147/150/e2c...

rglullis17• 5 years ago

When will we learn to stop making these silly calculations about "productivity" and understand that people are paid not by the value of their work, but by their scarcity?

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?

lostinquebec• 5 years ago

.. and how many Ballmers!

Aeolun6• 5 years ago

by their scarcity

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.

DasIch3• 5 years ago

When will we learn to stop making these silly calculations about "productivity" and understand that people are paid not by the value of their work, but by their scarcity?

You do realize that it's possible to disagree with that, right?

ChrisKnott2• 5 years ago

People made the same claim about Steve Jobs and Bill Gates and yet their companies greatly increased in value since they left.

ahtihn2• 5 years ago

How many Tim Cook's do you have lying around

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.

tandem5000• 5 years ago

Power centralization is an inevitable outcome of improved techniques. Centralized control imperfectly selects for highly specific skills that only few possess. One can attempt to regulate inequality and inform opinion to some extent, but this will become harder as we go forward due to their improved techniques enabling manipulation.

Thaxll2• 5 years ago

More than one out of 160k. CEO are like president they don't do much, you remove Cook and replace it by another high level exec, probably nothing will change for Apple.

All the major tech compagnies have increased their value over the last 10 years, so it's def not because of their incredible CEO.

crispyambulance3• 5 years ago

How many Tim Cook's do you have lying around?

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.

mouzogu• 5 years ago

It's the brutal reality. But the argument is a moral and ethical one - not the subjective value of an individual's contribution.

tolmasky• 5 years ago

How many Tim Cook's do you have lying around?

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.

II2II• 5 years ago

While it would be difficult to replace someone like Tim Cook, this should not serve as an excuse to treat people as disposable. This attitude of disposability, which is exactly what your comment about replacing 160k employees implies, brings to mind barbaric labour practices of the past.

varispeed• 5 years ago

Isn't this a form of tax evasion? By not hiring local people they avoid paying tax on their work. They also avoid any sensible employment regulations by outsourcing it to not so compatible with human rights China. In my opinion this kind of avoidance should be illegal. It does not benefit anybody except Communist Party of China and Apple.

mjlangiii• 5 years ago

Celebrating maximum exploitation of workers by those with all the leverage & power and calling the decent consideration of another man's well-being silly, that's, well, I'll just say that I believe we can do better, sir.

LandR• 5 years ago

How many Tim Cook's do you have lying around?

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.

Bancakes• 5 years ago

How many people can make predictable, iteratively improved products? The difficulty is in marketing.

ClumsyPilot4• 5 years ago

"people are paid not by the value of their work, but by their scarcity"

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?

PartiallyTyped• 5 years ago

I am, somehow, less interested in the weight and convolutions of ~~Einstein~~ Cook’s brain than in the near certainty that people of equal talent have lived and died in cotton fields and sweatshops.

Original quote by Stephen Jay Gould.

kwanbix• 5 years ago

I imagine Tim Cook is good, but that good? How much of the success is because he does unique work? I mean, I can understand maybe from someone like Steve who was a visionary, but Tim? It looks to me more of an executor than a visionary. I am not saying he is a bad leader or anything, but 750 million dollars is a LOT of money.

snowwrestler3• 5 years ago

There’s only one Tim Cook in the world. But, there’s also only one me in the world.

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.

wayneftw• 5 years ago

There are plenty of Tim Cooks around. THE Tim Cook is only in his position because of luck. Lucky to be born white white, in America and lucky in timing and connections.

Applejinx2• 5 years ago

Not exactly. Tim Cook is not paid by either the value of his work, or his scarcity. He is paid by the EXPECTATION of the value of his work… kind of like how stock markets work.

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?

howaboutnope• 5 years ago

people are paid not by the value of their work, but by their scarcity

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)

effingwewt• 5 years ago

Nothing about any CEO is special other than they haooened to land in the cushiest gig known to man. They effectively just suck all the money out as opposed to the people quite literally making the products.

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.

Grustaf7• 5 years ago

Put it this way. In the last 5 years Tim Cook has created $1900 b in shareholder value. If you divide that by 160000 you get $12 m. Now I don’t know how many phones a foxconn worker can make per year, but I do think it’s fair to assume they do not each create much more than $2 m in value annually.

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.

DasIch3• 5 years ago

In the last 5 years Tim Cook has created $1900 b in shareholder value.

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.

UncleMeat11• 5 years ago

Apple has how many employees? Cook was involved, but clearly is not the sole force contributing to that shareholder value.

throwthere• 5 years ago

For starters divide everything by 10 because this was for the last ten years (first line in the article). I think your suggestion that pay should be closely tied to productivity is kind of correct, but it’s missing a “value” component— and Cook provided a lot of value to a lot of people, 100s of billions. Pro rata he’s just getting a small commission. It’s not like you can hire 1600 workers and replace Cook with them.

siva7• 5 years ago

i would expect such reasoning on tabloids but on hn?

leesalminen3• 5 years ago

HN has been lurching left very quickly over the past years. Dunno if you’ve noticed.

nvilcins2• 5 years ago

Adding two _trillion_ dollars of net worth sounds pretty productive to me.

robin_reala• 5 years ago

Out of interest, how much of that two trillion dollars do you think is directly attributable to the role of CEO?

willcipriano• 5 years ago

What I find interesting is none of the outlets who are currntly proclaiming that there is a worker shortage ever mention the executive shortage. The executive shortage has massive impacts on firms, imagine how much value could be generated for the shareholders by the 750 million that was just blown on compensation? We should create tax incentives for firms to offshore their executives, as well as immigration programs that shackle executives in a job with fears of deportation for them and their families should they dare ask to be compensated like their domestic peers in order to improve the fitness and agility of the US economy.

option• 5 years ago

it is not about being 160K more productive. It is about supply and demand (of talent). Try finding even 5 Tim Cooks, not 160K. He is hired by Apple’s shareholders, what would happen to share price if he leaves?

varnaud• 5 years ago

Tim Cook can pay the Chinese workers rounding errors on his net worth because they and the other workers able to do similar work are not organized. They have no power. They can't ask for better working condition and better salary.

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

tailspin2019• 5 years ago

Most of the comments are focusing on your salary comparisons, and while I do think it's not quite as simple as what you've laid out (we know how capitalism and its reward structures work), the wider and much more important point I take from your comment is about how workers in these overseas factories are treated generally, not necessarily just about what they're paid.

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.

xornox• 5 years ago

For some reason owners of Apple value Tim Cook worth of billions.

I am sure that if you can replace Tim Cook and work for 390$ per month, owners will happily fire Tim Cook.

MikeLumos5• 5 years ago

How many of those 160,000 people would be able to successfully run Apple?

Would all 160,000 of them put together be able to do a better job than Tim did?

ericmay• 5 years ago

Ok now do this same exercise with your own salary.

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.

ultimatedogewow• 5 years ago

tbh I don‘t. Even compared to people in my country I feel like I‘m not creating much more value than those paid a minimum wage. I rather feel both lucky working in an industry where (too) much money changes hands and a bit guilty, too

jfroma• 5 years ago

Maybe a little off topic, but in my country you will have a very good life with $390 per month and yet we have near 35% of our population living on poverty.

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.

SMAAART2• 5 years ago

Recipe to have a nonsensical argument:

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

ZephyrBlu6• 5 years ago

Emotional arguments are more effective than logical ones, even if you are talking to smart people.

viztor• 5 years ago

That's the definition of capitalism.

dudul• 5 years ago

Compensation is a function of how difficult it is to find/replace a worker, not their productivity.

scyzoryk_xyz• 5 years ago

Chinese workers don't work for Apple. Apple, like any giant manufacturing conglomerate, relies on a complex supply chain of manufacturers who supply them with all the necessary parts and components. These manufacturers are also purchasing from even higher in the supply chain. As a company, Apple buys parts from suppliers, period. None of their business how these suppliers squeeze to deliver these parts at the best prices and quality.

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

cascom3• 5 years ago

Because those workers are not in a position to effect meaningful marginal value creation.

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.

vincentmarle• 5 years ago

In a capitalist society, wealth accumulation by the capitalist class has no relation whatsoever to number of hours worked or level of productivity. It is in fact the opposite, their wealth increases non-linearly to any input; ownership is all that matters. The worker class however, the Foxconn employees you’re talking about, have a linear relationship to their income, and yes, are generally taken advantage of by the capitalist class. It doesn’t matter that Tim Cook is a salaried employee, he is still part of the capitalist class because his income depends largely on Apple’s stock performance.

zeronine• 5 years ago

What makes Apple treat Chinese workers so differently?

You're asking the wrong question.

It should be: Why is there no disincentive to take unfair advantage of cheap foreign labor?

axelroze5• 5 years ago

Why there should be?

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.

brk• 5 years ago

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

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.

TrackerFF• 5 years ago

I think it's a interesting discussion, because often when CEO comps come under scrutiny, one side will naturally argue that company performance correlated directly to CEO performance.

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.

ZephyrBlu6• 5 years ago

I would actually propose that Tim Cook could be worth infinitely more than 160,190 Foxconn workers because they may have never re-created the iPhone.

sumedh2• 5 years ago

how is Tim so productive that he does roughly 160,000 people’s work

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.

bzbarsky9• 5 years ago

If we divide Tim's $750,000,000 bonus/payout this year by that $4,681.92 yearly Foxconn salary, we get 160,190

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.

fighterpilot3• 5 years ago

Supply and demand.

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 $$$.

axelroze5• 5 years ago

That's the biggest problem with the current monopoly capitalism. Centralization of power into single people making decisions with momentous impacts (be they 140+ IQ or total idiots as some other CEOs are). A good economy is made from small and medium enterprises in which some of them failing do not make much of a difference. That is also the basis of a good investment strategy, diversification.

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)

jstx1• 5 years ago

Good 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.

whitehouse3• 5 years ago

The 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.

nbzso• 5 years ago

I 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• 5 years ago

Can we just let Apple shareholders decide for themselves how they want to spend their money?

code_duck4• 5 years ago

That’s my question. How does this benefit Apple as a company or shareholders?

webinvest7• 5 years ago

The 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.

gok2• 5 years ago

Shareholders elected a board which voted to spend this money 10 years ago. If shareholders were unhappy they could elect a new board.

kenneth• 5 years ago

Given 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• 5 years ago

I 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.

jollybean4• 5 years ago

While 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.

s1artibartfast5• 5 years ago

Why not. Efficient companies create value out of nothing, certainly it is better for society than the counterfactual of them not creating value.

beaunative• 5 years ago

So 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• 5 years ago

IMO: 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• 5 years ago

And he will pay no taxes on it I estimate.

MikeLumos5• 5 years ago

You estimate wrong.

Top 1 percent of earners (with incomes over $540,009) pay over 40 percent of all income taxes.

thehappypm• 5 years ago

Edgy 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_nenakhov8• 5 years ago

When 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.

mFixman2• 5 years ago

Is 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_nenakhov8• 5 years ago

No, 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.

q3k• 5 years 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

therealdrag03• 5 years ago

There are cultural factors as well.

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.

GDC7• 5 years ago

When 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_ban4• 5 years ago

Relevant (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

iambateman• 5 years ago

How many of the grumpy “he shouldn’t be paid that much” comments were written on an iPhone?

axelroze5• 5 years ago

Bingo. 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• 5 years ago

Perhaps 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.

axelroze5• 5 years ago

If 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• 5 years ago

Isn't this taxes at 40%+ when this is paid?

doctor1• 5 years ago

Look who’s Cooking

Apple chief executive Tim Cook gets $750m payout

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