Tuesday, June 22, 2021

Are Tech’s richest men worth their wages?

This article is part of the On Tech newsletter. You can sign up here to receive it on weekdays.

Apple has been paying its CEO, Tim Cook, a total of $ 1.4 billion since 2007. Oracle’s chairman, Larry Ellison, raised nearly $ 1.9 billion in inventory and cash during the same period. And Mark Zuckerberg has pulled in $ 5.7 billion from Facebook since the company became known in 2012.

It is one of the billionaires of the technology industry. The cumulative salaries of half a dozen executives were more than $ 13.2 billion, according to a new analysis from the past 15 years. These are years in which technological enterprises become powerful forces in the economy, our lives and world affairs. The vote on technology has soured recently, but the technical bosses’ salaries remain mostly intact.

The New York Times published Friday an analysis of the top-paid executives of U.S. listed companies in 2020. During the pandemic, executives received the richest pay packages ever, reports my colleague Peter Eavis.

To get an idea of ​​what companies have paid their bosses over a longer period of time, executive compensation consulting firm Equilar ranked the ten executives with the most cumulative total salaries, until 2006 when the disclosure of corporate compensation changed. Tech bosses got six out of ten places, mainly because of the value of the stock their companies gave them.

The billion plus salaries of a handful of men – and yes, they are all men – raise a big and unanswerable question: how do we know if they’s worth the money?

Baseball stat geeks know of a mate named win over the substitute, which tries to quantify the value of a player by estimating how many more or fewer wins a team has with him compared to a substitute who could be cheaper. Even in the technology industry, which is obsessed with data, little effort is made to apply a profit above the replacement status for the corner office.

Perhaps a hypothetical replacement leader of Alphabet will do a better job than Sundar Pichai, and for less than the $ 1.1 billion in inventory and other compensation that Google’s parent company has paid him since 2015, according to the Equilar analysis. Boards usually do not try to find out. General managers are paid what they pay.

Let me dig deeper into some of the CEO’s payment figures. Calculating the chief operating officers who are ‘paid’ is a complicated and controversial exercise. In some cases, the compensation of technical bosses is even greater than the astonishing numbers were initially suggested.

When Cook took over from Steve Jobs as Apple CEO in 2011, the company promised to give him as many as 28 million shares over the next decade, after adjusting for the share divisions. At the time, Cook was at the top of The Times’ annual rankings of remunerated CEOs, based primarily on the potential value of $ 376 million. One expert calls Cook’s stock allotment “so historic that it distorts the numbers.”

But Cook would only take all the shares home if he held on for ten years and if the company’s share price rose faster than that of most other large companies. What will happen then? Cook is likely to collect all or nearly all of the shares, with a final lot available in August. According to one estimate, these shares are now worth $ 3.5 billion, or almost ten times the ‘historic’ number a decade ago.

Companies usually justify the top-dollar salary payouts by saying that the bosses are irreplaceable and that they only get rich when shareholders do so because they are largely paid in stock. Cook’s wallet has gotten fatter since 2011 from Apple’s rising share price, right next to everyone who happened to be buying Apple shares.

But again, it’s hard to estimate how much of Apple’s financial or stock performance Cook is doing. Maybe you will do 80 percent as well as Cooking at a fraction of the cost.

Apple does not disclose the $ 3.5 billion amount directly. I compiled it from Apple’s annual statements to shareholders. Equilar has calculated that Cook’s cumulative compensation since 2007, when he was Apple’s chief operating officer, is $ 1.4 billion. The figure of Equilar judged the value of Cook’s share in each year it was released to him, not the present value of those shares. Like I said, there are many ways to pay the CEO.

The figures may seem light years (or a handful of zeros) away from the financial situation of most people, but it also has an encouraging message for anyone who has no idea about money.

Zuckerberg topped the Equilar ranking of long-term CEOs, almost entirely from stock options on 120 million shares that Facebook gave him shortly after the company was founded. Zuckerberg sold about one-third of the shares for $ 2.3 billion more than a year after Facebook became known. If he had rather held those shares, it would now be worth almost $ 14 billion.

But do not lose sleep, and worry about Zuckerberg’s poor share sales. He is still $ 124 billion.

  • About the discount on the internet service … Emergency government funds are supposed to help lower-income Americans reduce their monthly Internet bills by up to $ 50. The news website Protocol found that even a small difference – such as an address ‘Street’ instead of ‘St.’ – was causing some internet companies to block qualifying people. (The Washington Post wrote last month about other adults in this internet discount program.)

  • Break out the soldering irons! Vice News reports that New York may be ready to become the first U.S. state to pass a law should make it easier and cheaper to repair your electronics and other goods. Some product manufacturers, including Apple and John Deere, have opposed it. “right to restore laws it would require them to give people and fix-it shops access to information manuals, tools and parts instead of relying only on authorized repairers.

  • How about “The Crown” crowns? To earn extra money, Netflix has opened an online store for merchandise related to the company and its shows, including ‘Lupine’ throw pillows and Netflix boxer shorts, report my colleagues John Koblin and Sapna Maheshwari.

Here is a live video stream to watch the snoring and waddling elephant seal antics on a California beach. (This was one of the entertainment recommendations of my colleague Amanda Hess.)

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