5 ms·

A large number of people who work at, say Apple, the company which bought the most of their stock back, will see very non-trivial increases in effective compens

A large number of people who work at, say Apple, the company which bought the most of their stock back, will see very non-trivial increases in effective compensation because of stock price rises.

ryandrake 8y ago
Those increases are only non-trivial and meaningful to employees who have a non-trivial or meaningful amount of equity. In other words a very small percentage of employees.
- tylerhou 8y ago
  Very small percentage? From a quick Google roughly 17-25% of Apple employees are engineers. Assuming all engineers get options, and that options are around 1/4 of an engineers compensation, and assuming that buybacks raised Apple's stock by 2% (I don't know how accurate that number is, but I'm just throwing it out there), each employee saw a 0.5% bonus per year assuming their options were issued before the buyback was decided. That's definitely non-negligible; it's around $1000/year for the average engineer. To be honest, I wouldn't be surprised if Apple also compensated some high-value non-engineers in stock. To find the actual number of people who benefit, you would have to include them, plus you would have to add in all the people who don't work at Apple but own Apple stock directly or indirectly (for example, while I don't work at Apple, I probably own some stock because of my participation in a mutual fund). I'm pretty certain that there are tens of thousands of people who see an increase in earnings because of Apple buybacks. The majority of them might be well-off since they are engineers or have the luxury of purchasing mutual funds, but I am hardly a millionaire or billionaire. EDIT: Did more Googling; Apple's stock jumped around 12% after announcing their buyback, so the bonus is around 3%. I would love a $6000 bonus/year for the next few years. [0] https://www.forbes.com/sites/chuckjones/2018/05/12/what-impact-could-apples-100-billion-stock-buyback-program-have-to-its-stock-price/#475d2b224c4c https://www.forbes.com/sites/chuckjones/2018/05/12/what-impa... [0]
  - ryandrake 8y ago
    Yes I guess it depends on your definition of non-trivial. $1000 is nice but it’s what, one or two weeks of rent? There are undoubtedly Apple (and other tech company) employees who watch their company’s stock price daily and receive a huge amount when it goes up 2% but not many of them.
    - tylerhou 8y ago
      I updated my comment with some actual numbers; it's probably around $6000/year that your previous option grant was active, with favorable tax treatment because it can be taxed as long term capital gains if you're smart (and if you work at Apple, you probably are).
  - jldugger 8y ago
    > Assuming all engineers get options, and that options are around 1/4 of an engineers compensation, and assuming that buybacks raised Apple's stock by 2% General consensus I've seen on Blind is that FANG engineers take in about half their wages in stocks, but that includes multiple years of RSU refreshers and appreciation. But there's another way to think about it: buyback money isn't that much different than a dividend where people self-sort into who wants the money now versus later. Apple approved a 100B buyback program in May, and 4,915,138,000 shares outstanding. 20 bucks a share. Most offers I've seen on blind are around $100k of shares, so for AAPL at today's market close price that'd be $9300 dollars returned. Probably a bit more given they're at an all time high and the announcement was a few months prior. So the 12 percent figure kinda makes sense: 10 percent or so of the shares announced to be retired via, and a 2 percent jump is explainable via typical earnings. I doubt you'd find an engineer paid in RSUs who wanted to end buyback programs, but maybe one will pop up on HN and enlighten us.
  - int_19h 8y ago
    Compared to the "bonus" that high-level execs and other big shareholders get, it's not even peanuts. The issue here isn't the absolute number, it's who benefits relative to whom.
    - 8y ago

A large number of people who work at, say Apple, the company which bought the most of their stock back, will see very non-trivial increases in effective compensation because of stock price rises.

ryandrake 8y ago

Those increases are only non-trivial and meaningful to employees who have a non-trivial or meaningful amount of equity. In other words a very small percentage of employees.

tylerhou 8y ago
Very small percentage? From a quick Google roughly 17-25% of Apple employees are engineers. Assuming all engineers get options, and that options are around 1/4 of an engineers compensation, and assuming that buybacks raised Apple's stock by 2% (I don't know how accurate that number is, but I'm just throwing it out there), each employee saw a 0.5% bonus per year assuming their options were issued before the buyback was decided. That's definitely non-negligible; it's around $1000/year for the average engineer. To be honest, I wouldn't be surprised if Apple also compensated some high-value non-engineers in stock. To find the actual number of people who benefit, you would have to include them, plus you would have to add in all the people who don't work at Apple but own Apple stock directly or indirectly (for example, while I don't work at Apple, I probably own some stock because of my participation in a mutual fund). I'm pretty certain that there are tens of thousands of people who see an increase in earnings because of Apple buybacks. The majority of them might be well-off since they are engineers or have the luxury of purchasing mutual funds, but I am hardly a millionaire or billionaire. EDIT: Did more Googling; Apple's stock jumped around 12% after announcing their buyback, so the bonus is around 3%. I would love a $6000 bonus/year for the next few years. [0] https://www.forbes.com/sites/chuckjones/2018/05/12/what-impact-could-apples-100-billion-stock-buyback-program-have-to-its-stock-price/#475d2b224c4c https://www.forbes.com/sites/chuckjones/2018/05/12/what-impa... [0]
- ryandrake 8y ago
  Yes I guess it depends on your definition of non-trivial. $1000 is nice but it’s what, one or two weeks of rent? There are undoubtedly Apple (and other tech company) employees who watch their company’s stock price daily and receive a huge amount when it goes up 2% but not many of them.
  - tylerhou 8y ago
    I updated my comment with some actual numbers; it's probably around $6000/year that your previous option grant was active, with favorable tax treatment because it can be taxed as long term capital gains if you're smart (and if you work at Apple, you probably are).
- jldugger 8y ago
  > Assuming all engineers get options, and that options are around 1/4 of an engineers compensation, and assuming that buybacks raised Apple's stock by 2% General consensus I've seen on Blind is that FANG engineers take in about half their wages in stocks, but that includes multiple years of RSU refreshers and appreciation. But there's another way to think about it: buyback money isn't that much different than a dividend where people self-sort into who wants the money now versus later. Apple approved a 100B buyback program in May, and 4,915,138,000 shares outstanding. 20 bucks a share. Most offers I've seen on blind are around $100k of shares, so for AAPL at today's market close price that'd be $9300 dollars returned. Probably a bit more given they're at an all time high and the announcement was a few months prior. So the 12 percent figure kinda makes sense: 10 percent or so of the shares announced to be retired via, and a 2 percent jump is explainable via typical earnings. I doubt you'd find an engineer paid in RSUs who wanted to end buyback programs, but maybe one will pop up on HN and enlighten us.
- int_19h 8y ago
  Compared to the "bonus" that high-level execs and other big shareholders get, it's not even peanuts. The issue here isn't the absolute number, it's who benefits relative to whom.
  - 8y ago