I wish we could all be mature enough that such pointless symbolic gestures were not necessary. This causes no hardship for Tim and makes no non-negligible impact on Apple's financials or employee wellbeing
I don’t think those two are remotely related to each other. You could drain the wealth of the top 1000 people to zero and still not support a social safety net in perpetuity.
To put some numbers behind it, the 735 billionaires in the world are worth $4.7 trillion total. Spread evenly across only 300 million people that’s only $15.6k each. Then that money is all gone.
First, a safety net wouldn't apply to 300 million people, only a small percentage of that who need it when it's necessary. Second, I'm not suggesting it is solely funded by taxing the megarich.
Other nations already offer healthcare. This isn't mathematically infeasible, it's been done elsewhere, and done for years.
By that logic he should have just kept is salary what it was. His salary now is about .05% of the companies revenue. That would be like the CEO of Mailchimp making 350k
symbolic gestures constitute a large part of the fabric of society. Saying "thank you" to someone doesn't provide any value, yet you do it, and people appreciate it.
I laugh at these companies laying off random people instead of cleaning up execs/managers, they treat their workforce like livestock, no wonder they are showing poor results lately
This isn't a PR exercise. Context is needed as below:
1. Shareholders have a "say-on-pay" vote, this is non-binding, but gives the board an idea of shareholder attitudes.
2. Institutional Shareholder Services raised concerns with their clients about Tim Cook's pay and requested that they vote against Tim's proposed package.
3. The approval vote dropped to 64% (usually around 95%).
4. Members of the compensation team engaged shareholders for an idea about where to set compensation. Tim then requested that.
Isn’t it fun to move goalposts! On layoff threads, people comment that the CEOs “taking full responsibility” should cut exec pay. Now we have a company that hasn’t had any layoffs and the CEO is taking a paycut and it’s a pointless symbolic gesture.
The goalpost comment really isn't necessary; there are a lot of people on this site, and it's inevitable that conflicting opinions will get expressed. I think there's an interesting point to be made about how widely differing expectations can make it difficult for public figures to avoid criticism from one group or another, but it's muddled by the dubious assumption that people commenting on articles are some monolithic unit rather than a varying set of individuals from one article to the next, each of whom have potentially unique perspectives and aren't necessarily the same people who commented on a different thread.
It's insulting to say that someone giving up a potential income amount that I will never achieve cumulatively in my entire lifetime is symbolic and pointless.
Consider the growing list of CEO who have "taken full responsibility" for layoffs without taking on any of the downside. Even on a symbolic level this is the right thing to do, but practically speaking it signals some sense of skin in the game which is sadly lacking from CEO's who let go of staff without acknowledging that it was a failure of their management in any material terms.
Here's the relevant excerpt from the SEC filing (page 11, edited for brevity):
"""
The Compensation Committee evaluates and makes compensation decisions prior to the start of each fiscal year... The Compensation Committee balanced shareholder feedback, Apple’s exceptional performance, and a recommendation from Mr. Cook to adjust his compensation in light of the feedback received. The Compensation Committee ... believes [the incentive changes] are responsive to shareholder feedback, while continuing both to align pay with performance and to recognize Mr. Cook’s outstanding leadership.
Mr. Cook’s 2023 target total compensation is $49 million, a reduction of over 40% from his 2022 target total compensation. ... [T]he Compensation Committee also intends to position Mr. Cook’s annual target compensation between the 80th and 90th percentiles relative to our primary peer group for future years.
The percentage of performance-based RSUs granted to Mr. Cook was increased from 50% to 75% of his 2023 target equity award and the percentage of his performance-based RSUs will be at least 75% of his target equity awards for future years.
The time-based RSUs awarded to Mr. Cook for 2023 provide for pro-rata instead of full vesting in the event of retirement during the term of the award. The Compensation Committee intends to maintain this same structure for future years.
Tim, despite heading one of the top performing publicly traded companies has taken a pay cut to somewhere between 80th-90th percentile of "their peers". But this does not seem as impressive knowing only 64% of shareholders supported his 2021 compensation (compared to 95% in 2020). Looks like Alpahabet is cutting exec compensation as well.
But hey, I mean as far as gestures go, this at least in line with "taking responsibility" for company performance. Better than not taking one, I suppose.
If this happens at more companies, eventually the entire field will come down meaningfully so that the compensation at the 80th percentile might become the 90th percentile over time
So is it fair to say that the title is misleading given that the shareholders, specifically institutional shareholders, requested the decrease in pay and Cook simply obliged?
Also, institutional shareholders are just other billionaire individuals and institutions. I think I care even less about their financials.
If reductions in pay of executives somehow made it to consumers, then that would be interesting.
Google, Meta, Microsoft, Amazon CEOs: “Yeah, we are doing layoffs, that’s totally my fault and I take the whole blame.” - they cut 10-15% of workforce, no repercussions for them
Apple CEO: “no layoffs here, but maybe cut my salary by 40%”
And yes, I know $50 million is couch change for Tim Apple
Yeah, how about if you lay off more than 1% of a publicly traded company, top level executive compensation must be 0 for the year.
Right now there's a misaligned incentive to perform layoffs in order to appease investors (including those in the boardroom) and pump the stock price even if the company is doing well.
That would be trivially gamed by either requiring more compensation up front or the CEO simply behaving against the interests of the company during hard times.
CEOs currently get paid either way, either by golden parachutes and retention bonuses when the company fails or by big paydays when the company grows.
It's in the best interest of the shareholders that the CEO of a failing company either have faith that it will turn around or negotiate an acquisition. I don't believe this is the case with current executive compensation structures.
And at least this penalty would be an incentive towards shrinking the company via attrition instead of disrupting the lives of thousands of employees and shocking the labour market.
I understand your sentiment and I agree that a slow trickle of attrition, if executed well and not coupled with an overly conservative hiring rate, would be one of the better side effects of your proposal.
It’s better to have loved and to have lost than to never have loved at all.
I would much rather have been hired at AWS in mid 2020 (which I was), make over six figures more over the next two years than I would have anywhere locally (I work remotely) and gotten laid off (I haven’t) than not be hired at all.
What makes you assume you wouldn't have simply found another well paying position, and still had it, since in this scenario companies are now thinking about hiring sustainably?
I too work remotely making more than I would locally, and I left my previous company for a new place only to be laid off six months later. I would far rather not been hired into the new company and still be where I was at than suddenly job hunting (I have plenty of runway, I should be fine).
> What makes you assume you wouldn't have simply found another well paying position, and still had it, since in this scenario companies are now thinking about hiring sustainably?
Well, in my specific case do you know of any other major tech company that would have hired me to consult other enterprise companies on how to develop on top of AWS?
> and I left my previous company for a new place only to be laid off six months later. I would far rather not been hired into the new company and still be where I was at than suddenly job hunting (I have plenty of runway, I should be fine).
I changed jobs 6 times between 2012-2020. I stay prepared to interview.
If investors see layoffs and judge that the company just became more valuable, either they are right or they are wrong.
If they are right, then isn't the job of management, in a principle fundamental to the US economic system, to follow their wishes? Management doesn't have to do whatever investors ask for, but there is no real justification for them to do something which is both against their wishes and against the interests of the company.
If they are wrong, then surely the problem is that most US companies are having their decision-making driven by a group of people who are paramount but who are making misguided or misinformed decisions. Any tweaking of the exact incentives which doesn't solve this problem is both a distraction and subject to the law of unintended consequences.
Note that I am not strongly in favor of either sweeping layoffs or of the specific US variant of capitalism in general. I just think that one should be honest about to what extent problems are unavoidable to the extent that one cleaves to a given system.
I’ve been noodling around this thought that businesses that provide “necessary for life and health” services (power, food, housing, healthcare, and tech) should not be allowed to make more than X profit year over year, provide bonus to C level and up, or give dividends/buybacks if, within a rolling 3 year period they have laid off anyone for a “financial” reason, or not increased employee wages tracked with inflation.
That's not the way companies and capitalism works, nor a company. Most of these firings are because they were booming during the pandemic. The role of a publically traded company isn't to provide jobs, it's to provide return on investment, and however the people who run a company see that should be carried out. I wish they could see beyond a quarter of two and see the value of building employee loyalty, but that seems to be a thing of the past.
Also, stock value definitely needs to be in the equation. It makes no sense to fire people if the company's valuation is increasing and thus stockholders are getting richer.
Salaries for most of these Tech CEO's are irrelevant. This gesture from Cook is all about the PR and will have nearly zero (or zero) impact on his daily life and compensation from running Apple. It looks really good though, and makes for a great headline.
For these folks, it's all about the stock.
By making this salary cut into a PR event, Cook's long term compensation is likely to skyrocket as shareholders reward the company's direction.
The article says this is a total comp cut, not just a salary cut. Salary before stock incentives for 2022 was only $3 million or so. I'm not sure what it had gone up to for 2023, but if it is a similar ratio of salary to other incentives, almost all of this 40% cut would be through stock incentive cuts wouldn't it?
What you say is true. The comment I was responding to mentioned other tech ceo's with a token or no salary.
Regardless, Cook already owns a massive amount of stock. The PR event, and the eventual rise in Apple's price will reward Cook massively over the long term.
It also paves the way for a dramatic increase in total compensation when the economy gets back to normal and Apple share price rises with the tide naturally.
The PR will fade, obviously his reduction isn't going to impact the stock enough to make up for it to him when multiplied by his minor fraction of the total (Cook owns around 0.02% of Apple).
It will make up for it multiplied across all non-Cook Apple shares, but isn't that the point?
None of the others will basically ever control enough shares to be able to have leverage over the board, so I'm not sure why that's relevant. Again, none of the above need any more stock.
I guess I really don't get the sentiment here. Layoffs are inherently bad and not just reflective of the market changing focus from growth to profits? Why is it clear that layoffs should have repercussions?
What does it mean when almost every big company's management made the same mistake?
I'm all for worker protections and good severance and unemployment benefits and its not great to be laid off but these takes just don't resonate with me.
Because most mgmt seems to have no skin in the game. When they make bad decisions, the underlings often pay for it. This is especially true when they write corpo-speak blog posts "taking responsibility," which includes laying off 10% of the workforce.
A CEO cutting his own pay seems like a much better first step. It signals accountability.
> Because most mgmt seems to have no skin in the game
This is not true. Most executives' compensation is tied to equity. For example, Tim Cook's base pay + bonus is 9M, but he has 40M in equity comp (performance + time based).
> A CEO cutting his own pay seems like a much better first step. It signals accountability.
> This is not true. Most executives' compensation is tied to equity. For example, Tim Cook's base pay + bonus is 9M, but he has 40M in equity comp (performance + time based).
Tim Cook is still getting paid millions. His pay cut was voluntary.
Workers getting fired are getting zero salary and are not leaving because they want to.
I'm sure Tim Cook isn't stressing about how to make rent or pay the mortgage, unlike people getting laid off.
I seem to remember when studying economics that someone analyzed management behavior and found senior executives were typically decent at their jobs and more or less had incentives to make decent decisions. Middle management was completely risk averse, had no skin in the game and made decisions only insofar as they wouldn't be fired. I wish I could find a link, but I read it years ago, though this more informal discussion cites similar work (they use family-owned businesses as a proxy for middle managers who do have skin in the game)[0]
I do think that a CEO showing accountability sets a standard for the rest of mgmt and the organization, which is perhaps more accurate; though I'd hope that organizations find ways to hold middle management accountable for failures
So an executive worth billions of dollars and making tens of millions a year with no risk of being laid off has the same skin in the game as the employees making in the lower to mid six figures who get laid off?
The skin in the game being referred to is losing their job, not losing some fractional percentage of their net worth.
Losing your job is a big deal to the average person, but a salary cut is immaterial to a big tech executive. An executive salary cut would save hundreds of jobs.
People are laid off because the company is trying to spend less. There are multiple people in the same role and the headcount can be decreased to decrease spend on overall salary without decreasing the salary of individuals. But just because there is only one person in each executive role does not mean that money can't be saved on executive salaries.
This is a misdirection. CEO salaries can be set to zero for all I care. I just think the idea that reducing headcount is not a legitimate strategy seems naive to me.
> I just think the idea that reducing headcount is not a legitimate strategy seems naive to me.
This reads like a disingenuous attempt at a strawman.
It's immaterial if firing people is a legitimate strategy or not. The whole point is that executives get little to no repercussion for dictating layoffs, regardless of the company's health.
They wake up one day, can decide to fire 10k people, order HR to prune the loose ends to meet the target, tell the assistant to write a heart-felt "I take full responsibility" email, and get back to browse the web or sip lattes or go for a nice walk like nothing happened. In the end they can even get a raise out of it.
Layoffs are bad for a myriad of reasons. They are purely an accounting action, but they ignore that the line items represent people. Layoffs say that we will sacrifice our employees when the company has poorly planned, because our people are only positive assets when we're trying to hire.
Management and especially executives are the least affected by layoffs, yet it was their decision making that led to the layoffs in the first place. In fact, these people stand to gain from layoffs because they have heavy equity compensation and shareholders seem to froth at the mouth for layoffs.
This idea that companies move from growth to profit and back and forth seems naïve at best. Yet, companies do indeed do this. So the executives who rode the past three years of insane stock growth, making a ton from equity and investments and hiring like madmen, now get to turn around and say "we're sorry, good luck paying your mortgage".
The incentives are all wrong, as the very people who control the decisions that lead up to layoffs are both immune from the layoffs and tacitly benefit from them.
Everyone and their dog knew this market clawback was coming, and it's been here for over a year already. You're telling me these supposedly brilliant executives couldn't have planned better?
Lately, and I've seen it happen, after layoffs, the companies immediately start hiring again for the exact same positions they just laid off. Over time, they hire a large portion of the positions back. So, what was the point? The point was to appease stockholders in the short term.
If you go out there and say "it's all my fault and I take full responsibility", but there's no consequences out of that for you, then your words are meaningless.
This seems mostly to be a gesture towards some approximation of solidarity with staff during a time of mass layoffs in the industry.
And I think it's a good move, if only to help make apple staff feel slightly more comfortable in their jobs. And help keep productivity and timelines on track.
Tim knows his employees are not stupid. That's why he hired them- they are smart, smart enough to know when they are being led to the shed out back. And Tim also know that that frightened cows produce bad milk. So he makes the smart move to keep his employees close, even at the expense of some short term loss, and as a bonus, he looks like a saint in comparison to all the other CEO's who shed their workers like dead weight.
If only there was more textual information as a supplement to the headline. I imagine such a supplement (which I'm going to call "article" since it's a fun word) would provide details about the headline. In this case, such an article would maybe explain why that was happening... i don't know, say maybe investors not approving of his salary the same anymore. I imagine the article might go into whether that's salary or total comp, and maybe a breakdown of what that total comp means. Bonus, what I imagine to be a decent article they would even mention restructuring of incentives if that was involved.
To me this looks like a smart move on Tim's behalf, because if layoffs are coming, he will say "hey, I did my part and still things did not work they way we expected to; so please accept my sincere apologies in advance, but we need to layoff some teams...I hope you understand!"
I could be wrong, but it has some form of logic in it...
98 comments
[ 5.1 ms ] story [ 180 ms ] threadFrankly it’s refreshing to see a CEO cut his own pay vs continuously increasing it regardless of how well the company performs.
It would be equally performative. This is morality theater. I'd only question his judgment about public relations.
I do understand the reasoning for this adjustment of his salary. I'm simply saying I wish it was not necessary. It's sad.
In that case, many leading CEOs are just taking symbolic salaries to do their jobs. I wonder why they even bother.
What would be refreshing is an adequate social safety net. Not mega rich getting slightly less megarich.
To put some numbers behind it, the 735 billionaires in the world are worth $4.7 trillion total. Spread evenly across only 300 million people that’s only $15.6k each. Then that money is all gone.
First, a safety net wouldn't apply to 300 million people, only a small percentage of that who need it when it's necessary. Second, I'm not suggesting it is solely funded by taxing the megarich.
Other nations already offer healthcare. This isn't mathematically infeasible, it's been done elsewhere, and done for years.
In fact, we all know that saying Thank you may provide real value to both sides, because we mean it
But meaningless gestures, such as a billionaire at a wealthy and healthy company taking a paycut, harm and devalue our social fabric
It affects the morale of your employees, knowing even your execs bear the price of struggle helps with mental health
It's documented and Nintendo applied it countless times during its history, look at the result today
https://www.polygon.com/2013/7/5/4496512/why-nintendos-sator...
I laugh at these companies laying off random people instead of cleaning up execs/managers, they treat their workforce like livestock, no wonder they are showing poor results lately
1. Shareholders have a "say-on-pay" vote, this is non-binding, but gives the board an idea of shareholder attitudes.
2. Institutional Shareholder Services raised concerns with their clients about Tim Cook's pay and requested that they vote against Tim's proposed package.
3. The approval vote dropped to 64% (usually around 95%).
4. Members of the compensation team engaged shareholders for an idea about where to set compensation. Tim then requested that.
Thank you for explaining the context so well. But I disagree with your first claim. I'm saying it is totally a PR exercise.
and if the same, then if their outlook has class struggle leanings, they're being entirely consistent, capitalist class bad.
Tim Cook will never feel the pain of a layoff like someone at the genius bar.
"""
The Compensation Committee evaluates and makes compensation decisions prior to the start of each fiscal year... The Compensation Committee balanced shareholder feedback, Apple’s exceptional performance, and a recommendation from Mr. Cook to adjust his compensation in light of the feedback received. The Compensation Committee ... believes [the incentive changes] are responsive to shareholder feedback, while continuing both to align pay with performance and to recognize Mr. Cook’s outstanding leadership.
Mr. Cook’s 2023 target total compensation is $49 million, a reduction of over 40% from his 2022 target total compensation. ... [T]he Compensation Committee also intends to position Mr. Cook’s annual target compensation between the 80th and 90th percentiles relative to our primary peer group for future years.
The percentage of performance-based RSUs granted to Mr. Cook was increased from 50% to 75% of his 2023 target equity award and the percentage of his performance-based RSUs will be at least 75% of his target equity awards for future years.
The time-based RSUs awarded to Mr. Cook for 2023 provide for pro-rata instead of full vesting in the event of retirement during the term of the award. The Compensation Committee intends to maintain this same structure for future years.
"""
But hey, I mean as far as gestures go, this at least in line with "taking responsibility" for company performance. Better than not taking one, I suppose.
Also, institutional shareholders are just other billionaire individuals and institutions. I think I care even less about their financials.
If reductions in pay of executives somehow made it to consumers, then that would be interesting.
Apple CEO: “no layoffs here, but maybe cut my salary by 40%”
And yes, I know $50 million is couch change for Tim Apple
Right now there's a misaligned incentive to perform layoffs in order to appease investors (including those in the boardroom) and pump the stock price even if the company is doing well.
It's in the best interest of the shareholders that the CEO of a failing company either have faith that it will turn around or negotiate an acquisition. I don't believe this is the case with current executive compensation structures.
And at least this penalty would be an incentive towards shrinking the company via attrition instead of disrupting the lives of thousands of employees and shocking the labour market.
It’s better to have loved and to have lost than to never have loved at all.
I would much rather have been hired at AWS in mid 2020 (which I was), make over six figures more over the next two years than I would have anywhere locally (I work remotely) and gotten laid off (I haven’t) than not be hired at all.
I too work remotely making more than I would locally, and I left my previous company for a new place only to be laid off six months later. I would far rather not been hired into the new company and still be where I was at than suddenly job hunting (I have plenty of runway, I should be fine).
Well, in my specific case do you know of any other major tech company that would have hired me to consult other enterprise companies on how to develop on top of AWS?
> and I left my previous company for a new place only to be laid off six months later. I would far rather not been hired into the new company and still be where I was at than suddenly job hunting (I have plenty of runway, I should be fine).
I changed jobs 6 times between 2012-2020. I stay prepared to interview.
If they are right, then isn't the job of management, in a principle fundamental to the US economic system, to follow their wishes? Management doesn't have to do whatever investors ask for, but there is no real justification for them to do something which is both against their wishes and against the interests of the company.
If they are wrong, then surely the problem is that most US companies are having their decision-making driven by a group of people who are paramount but who are making misguided or misinformed decisions. Any tweaking of the exact incentives which doesn't solve this problem is both a distraction and subject to the law of unintended consequences.
Note that I am not strongly in favor of either sweeping layoffs or of the specific US variant of capitalism in general. I just think that one should be honest about to what extent problems are unavoidable to the extent that one cleaves to a given system.
Those that ignore that rule become heavily fined.
Also, stock value definitely needs to be in the equation. It makes no sense to fire people if the company's valuation is increasing and thus stockholders are getting richer.
For these folks, it's all about the stock.
By making this salary cut into a PR event, Cook's long term compensation is likely to skyrocket as shareholders reward the company's direction.
Regardless, Cook already owns a massive amount of stock. The PR event, and the eventual rise in Apple's price will reward Cook massively over the long term.
It also paves the way for a dramatic increase in total compensation when the economy gets back to normal and Apple share price rises with the tide naturally.
It will make up for it multiplied across all non-Cook Apple shares, but isn't that the point?
Zuck can do whatever he wants and remain in control. The others have to keep the board happy...
What does it mean when almost every big company's management made the same mistake?
I'm all for worker protections and good severance and unemployment benefits and its not great to be laid off but these takes just don't resonate with me.
A CEO cutting his own pay seems like a much better first step. It signals accountability.
This is not true. Most executives' compensation is tied to equity. For example, Tim Cook's base pay + bonus is 9M, but he has 40M in equity comp (performance + time based).
> A CEO cutting his own pay seems like a much better first step. It signals accountability.
This, I agree with.
Tim Cook is still getting paid millions. His pay cut was voluntary.
Workers getting fired are getting zero salary and are not leaving because they want to.
I'm sure Tim Cook isn't stressing about how to make rent or pay the mortgage, unlike people getting laid off.
I seem to remember when studying economics that someone analyzed management behavior and found senior executives were typically decent at their jobs and more or less had incentives to make decent decisions. Middle management was completely risk averse, had no skin in the game and made decisions only insofar as they wouldn't be fired. I wish I could find a link, but I read it years ago, though this more informal discussion cites similar work (they use family-owned businesses as a proxy for middle managers who do have skin in the game)[0]
I do think that a CEO showing accountability sets a standard for the rest of mgmt and the organization, which is perhaps more accurate; though I'd hope that organizations find ways to hold middle management accountable for failures
[0] https://www.wealthmanagement.com/equities/why-management-nee...
The skin in the game being referred to is losing their job, not losing some fractional percentage of their net worth.
This reads like a disingenuous attempt at a strawman.
It's immaterial if firing people is a legitimate strategy or not. The whole point is that executives get little to no repercussion for dictating layoffs, regardless of the company's health.
They wake up one day, can decide to fire 10k people, order HR to prune the loose ends to meet the target, tell the assistant to write a heart-felt "I take full responsibility" email, and get back to browse the web or sip lattes or go for a nice walk like nothing happened. In the end they can even get a raise out of it.
Meanwhile, 10k workers are screwed.
The incentives are all wrong.
I also don't understand what a smooth strategy does in real terms. Layoffs should have been in smaller increments, started sooner, and lasted longer?
Management and especially executives are the least affected by layoffs, yet it was their decision making that led to the layoffs in the first place. In fact, these people stand to gain from layoffs because they have heavy equity compensation and shareholders seem to froth at the mouth for layoffs.
This idea that companies move from growth to profit and back and forth seems naïve at best. Yet, companies do indeed do this. So the executives who rode the past three years of insane stock growth, making a ton from equity and investments and hiring like madmen, now get to turn around and say "we're sorry, good luck paying your mortgage".
The incentives are all wrong, as the very people who control the decisions that lead up to layoffs are both immune from the layoffs and tacitly benefit from them.
Everyone and their dog knew this market clawback was coming, and it's been here for over a year already. You're telling me these supposedly brilliant executives couldn't have planned better?
Lately, and I've seen it happen, after layoffs, the companies immediately start hiring again for the exact same positions they just laid off. Over time, they hire a large portion of the positions back. So, what was the point? The point was to appease stockholders in the short term.
It's not saving the company from doing 10% layoffs.
Not even 0.1%...
For most of these big wig shareholders it's probably the other way around, though.
Since Sep 2019, Apple's workforce increased by 20%. Microsoft was next closest with 53%, and both Meta and Amazon pretty much doubled.
[1] https://www.wsj.com/articles/how-apple-has-so-far-avoided-la...
And I think it's a good move, if only to help make apple staff feel slightly more comfortable in their jobs. And help keep productivity and timelines on track.
What a world that would be.
I could be wrong, but it has some form of logic in it...