Apple Rewards Top Execs With Tons of Stock Options

[watcha]

struggles*

 

[watcha]

[citation][nom]three0duster[/nom]It all comes down to taxes here folks. Income is taxed at roughly 25%, more if you are rich. Stocks, no matter the amount is only 15%. Its called tax evasion, or corporate loopholes. Either way, its the American way.[/citation]

Tax avoidance is legal.

Tax evasion, is not.

This is tax avoidance.

 

[vaughn2k]

They should have reward people who did the job.
Not the people who sits there like a monkey up on a tree.

Seriously, if you look at the top of that tree, with those monkeys, you see @$$holes, right?

 

[halcyon]

[citation][nom]vaughn2k[/nom]They should have reward people who did the job.Not the people who sits there like a monkey up on a tree.Seriously, if you look at the top of that tree, with those monkeys, you see @$$holes, right?[/citation]
...what makes you assume they don't reward the people that do the job? For all we know they're giving stock options and brand new 12-core Mac Pros to those folks. Heck, I'd take it.

 

[watcha]

[citation][nom]vaughn2k[/nom]They should have reward people who did the job.Not the people who sits there like a monkey up on a tree.Seriously, if you look at the top of that tree, with those monkeys, you see @$$holes, right?[/citation]

The logic is as follows: employees in higher positions have a greater range of results from what they do. Lets take two extremes, a minimum wage guy on the line, vs a CEO. The guy on the line, if he cocks up, it gets noticed by quality control, he gets fired, he gets replaced. Cost to the company - a bit of staff turnover.

The CEO cocks up, the company goes from making billions to losing billions. A much bigger variance, a far greater risk. It therefore makes sense to a) Pay the people higher up more, in order to ensure they are the best quality people, and b) Make sure they are incentivised in order to maximise their effectiveness. It also makes more sense to reward the people who arguably had a greater influence in what made the company a success, and that will always be the people at the top who made the bigger decisions.

 

[halcyon]

[citation][nom]watcha[/nom]The logic is as follows: employees in higher positions have a greater range of results from what they do. Lets take two extremes, a minimum wage guy on the line, vs a CEO. The guy on the line, if he cocks up, it gets noticed by quality control, he gets fired, he gets replaced. Cost to the company - a bit of staff turnover.The CEO cocks up, the company goes from making billions to losing billions. A much bigger variance, a far greater risk. It therefore makes sense to a) Pay the people higher up more, in order to ensure they are the best quality people, and b) Make sure they are incentivised in order to maximise their effectiveness. It also makes more sense to reward the people who arguably had a greater influence in what made the company a success, and that will always be the people at the top who made the bigger decisions.[/citation]
There you go making sense again. Watcha, it will not be tolerated!

 

[Device Unknown]

[citation][nom]watcha[/nom]The logic is as follows: employees in higher positions have a greater range of results from what they do. Lets take two extremes, a minimum wage guy on the line, vs a CEO. The guy on the line, if he cocks up, it gets noticed by quality control, he gets fired, he gets replaced. Cost to the company - a bit of staff turnover.The CEO cocks up, the company goes from making billions to losing billions. A much bigger variance, a far greater risk. It therefore makes sense to a) Pay the people higher up more, in order to ensure they are the best quality people, and b) Make sure they are incentivised in order to maximise their effectiveness. It also makes more sense to reward the people who arguably had a greater influence in what made the company a success, and that will always be the people at the top who made the bigger decisions.[/citation]

Your logic is flawed.
If you think that company turnover does not cost anything, you're seriously mistaken.
How about paying the minimum wage people what they are worth? Then you have a happy employee, who is more dedicated to the company because they are taken care off. Then the company has very little turn over. Some companies invest millions in ensuring their "minimum wage" employee remains happy. Happy employees are more fruitful.

However, your comment was partially correct. The mistakes of higher management do cost the company more, generally.

 

[vaughn2k]

[citation][nom]watcha[/nom]The logic is as follows: employees in higher positions have a greater range of results from what they do. Lets take two extremes, a minimum wage guy on the line, vs a CEO. The guy on the line, if he cocks up, it gets noticed by quality control, he gets fired, he gets replaced. Cost to the company - a bit of staff turnover.The CEO cocks up, the company goes from making billions to losing billions. A much bigger variance, a far greater risk. It therefore makes sense to a) Pay the people higher up more, in order to ensure they are the best quality people, and b) Make sure they are incentivised in order to maximise their effectiveness. It also makes more sense to reward the people who arguably had a greater influence in what made the company a success, and that will always be the people at the top who made the bigger decisions.[/citation]

Man, you don't understand... I said rewarded, not salaried...

 

[gorehound]

And the Normal workers at Apple got a dime per hour raise !!!
Corporations are a piece of poop.

 

[watcha]

[citation][nom]Device Unknown[/nom]Your logic is flawed.If you think that company turnover does not cost anything, you're seriously mistaken.How about paying the minimum wage people what they are worth? Then you have a happy employee, who is more dedicated to the company because they are taken care off. Then the company has very little turn over. Some companies invest millions in ensuring their "minimum wage" employee remains happy. Happy employees are more fruitful.However, your comment was partially correct. The mistakes of higher management do cost the company more, generally.[/citation]

Erm, I listed the staff turnover as the cost of a bad employee on the line, so clearly I am aware it is a cost. It is not, however, as much of a cost as a mistake from a CEO would cause.

In terms of all wages, minimum or otherwise, on the line or CEO, you pay them the least amount you feel they will be happy enough with to do the job you ask of them, so long as that price doesn't exceed what you are willing to pay. If they have a working guy in a factory who delivers what they want for minimum wage, they aren't going to gain much by paying him more. If they would gain, financially, by paying them more, then that's a reasonable business case and they would. The reality, however, is that they can get workers they are happy with the product of for the wages they pay. Remember, the employee also agreed to work for this rate and continues to work there, despite being able to leave after giving however much notice. Both sides agreed to employ / be employed because it was mutually beneficial. Every employee in every job can leave if the job is worse than not having the job.

[citation][nom]vaughn2k[/nom]Man, you don't understand... I said rewarded, not salaried...[/citation]

Salary and 'bonuses' are all forms of reward for doing a job. A salary is a guaranteed reward, a bonus is a reward based on performance, which achieves the incentivisation I mentioned earlier.

 

[cyprod]

[citation][nom]Occupy your street[/nom]Clearly no one here understands how stock options work. While these big numbers sound impressive and make your anti-Apple fervor peak, how much do you think these options are worth? Tick tock, tick tock... The answer is $0.Stock options give the grantee the right (after usually 5 years of vesting) the right to purchase the granted shares at the grant price. The grant price is the price of the shares on the open market at the time of the grant. The only way the options are of value to the grantees is if the stock price goes up. Then they can purchase the shares at the lower grant price and immediately sell them at the current price (cashless transaction).So the entire point is to serve as a motivation to increase the value of the company (at least as far as the stock market is concerned).[/citation]
You're close, but not quite. It actually deals more with what's called the "strike price" and depending on the strike price of these options, they could be worth 400 million, or they could be worth 0 today. When you're granted an option, they're assigned a strike price, when the option vests, you're allowed to sell the option. The amount you get for the sale is current value - strike price. The strike price is not guaranteed to be the value of the stock when the option was granted. For example, when one of my friends got hired on to google, he got a sign on bonus of 25 options with a 0 dollar strike price vested immediately, or roughly a 10K sign on bonus. Obviously, if at the time of vesting, the stock price has dipped below the strike price, the options are worthless.

That being said, I would be curious as to what the strike price is on these. You're talk of grant price deals more with an "employee stock purchase program", which is what is more the norm in todays world for engineers. You can sign up and have money withheld to go to usually quarterly purchases where they'll buy stocks at say 75% of the current market value. Then of course there's the one I was part of where I'd buy in, and quarterly they'd buy shares at market value, then after 3 years, they match share for share. *sigh* My current employer doesn't have an ESPP sadly.

 

[del35]

Defraud gullible dumbed-down fanboys with locked-down junkhardware at exorbitant prices, and reward top executives. Ummm nice business model.

 

[joebob2000]

[citation][nom]cyprod[/nom]You're close, but not quite. It actually deals more with what's called the "strike price" and depending on the strike price of these options, they could be worth 400 million, or they could be worth 0 today. When you're granted an option, they're assigned a strike price, when the option vests, you're allowed to sell the option. The amount you get for the sale is current value - strike price. The strike price is not guaranteed to be the value of the stock when the option was granted. For example, when one of my friends got hired on to google, he got a sign on bonus of 25 options with a 0 dollar strike price vested immediately, or roughly a 10K sign on bonus. Obviously, if at the time of vesting, the stock price has dipped below the strike price, the options are worthless.That being said, I would be curious as to what the strike price is on these. You're talk of grant price deals more with an "employee stock purchase program", which is what is more the norm in todays world for engineers. You can sign up and have money withheld to go to usually quarterly purchases where they'll buy stocks at say 75% of the current market value. Then of course there's the one I was part of where I'd buy in, and quarterly they'd buy shares at market value, then after 3 years, they match share for share. *sigh* My current employer doesn't have an ESPP sadly.[/citation]

I think the more sinister thing about this sort of compensation is that (correct me if I am wrong) the option contract is created "out of thin air", that is to say Apple didn't spend any money on this, the money will come from the creation of the shares when the options are exercised. To put it simply, the shareholders are paying for this directly and it doesn't impact the bottom line. Fine, for a company that pays dividends and has a normal P/E ratio (since the impact is seen immediately either way). In this case, Apple gets to use these options to keep its execs happy without affecting the balance sheet, and the ballooning of AAPL continues on.

 

[sinfulpotato]

[citation][nom]watcha[/nom]Wheras if Apple didn't employ them, they would suddenly become rich, live an amazing and prosperous life with no struggled, no pain and no hassle.Wake up. The problem is the fact they are impoverished.[/citation]

Apple makes enough profit that it would be POCKET CHANGE to make their lives so much better.

 

[watcha]

[citation][nom]sinfulpotato[/nom]Apple makes enough profit that it would be POCKET CHANGE to make their lives so much better.[/citation]

So do many companies. So do most people. Including you.

Apple is not a charity.

If you want to campaign for every company to be a charity, fine, but you should realise that's what you're doing, and you should also be donating your own money.

If someone posted on an online forum that YOU personally should give your money to charity, it would be the same argument. It's your money, you do what you want with it. Samsung are equally well equipped to help the people, as are Microsoft, Google, etc so it becomes less of an Apple criticism but more a criticism of any company which makes money.

 

[Guest]

@watcha

and though you have some interesting points i sit here and wonder what factory/line workers got to do with anything. In the main COE are close to worthless, they are just over paid scape goats, when something bad goes wrong they the first to get pushed or jump ship, it's like musical chairs the move from companies to companies, most of them come from accounts of MBAs and couldn't tell a USB port from a PS/2.

The brunt of the work for companies like Apple are done by the engineers and designers, Mr Jobs can have the best idea under the sun but if not for his Army of designers and engineers it all amount to nothing, an unmotivated uncommitted engineer/design work force can cause significant cost damage too (look at the Sandy bridge chipset escapade and how much it cost to fix that minor engineering hiccup) not to mention anything of poor sales from a poorly designed/engineered product, a handful of stock options seems like an insult of a reward when the company is making billions upon billions in profit

 

[g-unit1111]

[citation][nom]gorehound[/nom]And the Normal workers at Apple got a dime per hour raise !!!Corporations are a piece of poop.[/citation]

Exactly - I bet the Apple store employees get jack. Corporate greed... it's the American way!

 

[halcyon]

[citation][nom]g-unit1111[/nom]Exactly - I bet the Apple store employees get jack. Corporate greed... it's the American way![/citation]
They have a job and they get a paycheck. ...and they get to work in a relaxed and fun environment (at least from my perspective). What do you think all Apple store employees should be getting in addition to this?

 

[watcha]

[citation][nom]EngineerRantings[/nom]@watchaand though you have some interesting points i sit here and wonder what factory/line workers got to do with anything. In the main COE are close to worthless, they are just over paid scape goats, when something bad goes wrong they the first to get pushed or jump ship, it's like musical chairs the move from companies to companies, most of them come from accounts of MBAs and couldn't tell a USB port from a PS/2.The brunt of the work for companies like Apple are done by the engineers and designers, Mr Jobs can have the best idea under the sun but if not for his Army of designers and engineers it all amount to nothing, an unmotivated uncommitted engineer/design work force can cause significant cost damage too (look at the Sandy bridge chipset escapade and how much it cost to fix that minor engineering hiccup) not to mention anything of poor sales from a poorly designed/engineered product, a handful of stock options seems like an insult of a reward when the company is making billions upon billions in profit[/citation]

I think you are accusing me of not valuing the engineers, but I would say conversely you are under-valuing the CEO's. Many of the engineers at many companies are very very well paid, and by engineers, I mean design engineers, the people who design and innovate and come up with a concept which can be product on a massive scale. Take Jonathan Ive for example, 'Chief Designer' at Apple - VERY highly paid - very highly regarded, very well respected. I don't think he's undervalued by anyone. The workers who end up building the final product don't need to have anywhere near his calibre, to follow a set of blueprints like a production line, many of which produced by machine. So it's fair that he gets paid loads, and they get paid in line with the skill set required to do their jobs.

All of this is very good, at this point you've got a well engineered product, but there are two vital ingredients missing. The first, the idea itself - and the second, the business strategy. Both of these are essential to any successful product, very much as important as the engineering itself. Many of the ideas for products never came from Steve Jobs, or from other CEO's, rather from his team (people like Jonathan Ive) - but that's the role of the CEO (to come up with ideas) Their role is to distinguish the good ideas, from the bad, and to work out the long term company strategy of bringing together idea, technology, engineering, marketing and distribution. That's a series of massively important and critical areas to have an overriding say on - it controls the entire direction of the company. It is a big mistake to disregard what the CEO's actually have to do, there are too many countless examples of companies taking a bad turn under the wrong CEO to demonstrate this. You say they are 'scapegoats' - but they are ultimately responsible for anything. Any failure comes back to a decision of theirs which was wrong - it's not a scapegoat, it's legitimate blame. Even things like maintaining a 'motivated, committed engineer/design work force' is the job of the CEO - exactly the important thing you describe. If you're right in that this decision not to give every engineer is a mistake, then I'm sure we'll see the next batch of Apple products fail miserably and awfully engineered. If I'm correct, then we'll continue to see the same standard we always have, evidence of a perfectly managed and happy engineering team.

🙂

 

[watcha]

but that's not* the role of the CEO

decision not to give every engineer a bonus*