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What people forget in the debate over public company 'CEOs' is that, when the price of disney shares goes up from $24 to $135, that is millions upon millions of

What people forget in the debate over public company 'CEOs' is that, when the price of disney shares goes up from $24 to $135, that is millions upon millions of peoples retirements that are that much more secure. So, I mean, would you pay $66 million to someone for a better retirement for others? Now, I don't know the answer to this question, but this way of looking at the stock price of public companies is often lost on people of all political persuasions. Another thing to keep in mind is that, Iger 'only' made $3million last year. Most of the money reported as 'income' is actually stock grants. $66mln disney stock is not a controlling share, and -- by tying up Iger's wealth in the company -- it aligns his incentives with those of the wealth he has been charged with managing. Nevertheless, Iger couldn't sell this much stock without either being accused of insider trading (since such a large sale would surely manipulate the stock price), and the SECs regulations on insider trading are very strict (they prosecute based on the appearance of insider trading). Thus, given that he can't actually sell the disney stock, it's a real disservice to say he made $Xmillion in disney stock, given that the stock has no immediate cash value to him.

starpilot 8y ago
Why is any success that company experiences attributed to the CEO's actions? Warren Buffett said that when a business known for difficulty encounters a manager known for brilliance, it's the reputation of the business that remains. We saw this when an ex-Apple retailer tried to revive JC Penney, and when Marissa Mayer was at the helm of Yahoo. These companies died in spite of their management, how do we know that it is not the same for when they succeed?
- tathougies 8y ago
  And yet, Berkshire Hathaway, a textile manufacturer, was able to become a global conglomerate because of the leadership of one man? The cases you mention show exactly the issue with having a poor CEO. The fact is both of these managers attempted to keep their companies in markets in which they could not make money. It is useful to think of a CEO not as a day-to-day operations manager, but rather as an institutional investor charged with seeking a larger return on the money invested in their fund by engaging in direct business transactions (rather than purchasing shares for example). In this sense, both JCP and Yahoo failed to manage their money properly. (BTW, being Marissa Mayer or an 'ex-apple retailer' does not make one a good CEO, as demonstrated by your examples)
  - k_sze 8y ago
    I haven’t really followed JCP and Yahoo, but who actually made the decision “to keep their companies in markets in which they could not make money”? Was it the CEO or the board of directors? If it was the board that made the decision, then can we really blame the CEO?
- csallen 8y ago
  Your assumption is that the management was good despite their failures. It's quite possible that they simply didn't perform well or make great decisions, despite their reputations.
georgeecollins 8y ago
Two points: A CEO should certainly be well rewarded for a companies growth. Should it be 1500 times the average worker? During the period of the fastest US GDP growth that ratio was at least 10 times less so maybe the ratio could be lower. CEOs in the US buy back stock a lot these days. That naturally raises the price and doesn’t take a lot of skill or vision. Maybe it is a good idea (it depends) but do you really need to give out lavish compensation when you can manipulate the price?
- adventured 8y ago
  Jimmy Garoppolo is a mere #90 on the last Forbes Entertainers list, for most earnings for 2018 (Jun 2017 - Jun 2018). He made $36 million. Why should he be allowed to make 900 times what the janitor in the stadium does? He's not even going to be a consequential QB. We should pass a law that says no QB may earn more than $300,000. Adam Sandler earned $39.5 million to produce some mediocrity. We should obviously make that illegal, right? So if you run a $223 billion company like Disney, you should earn 1/20th what Adam Sandler does to squeeze out a few bad movies for Netflix. How about running a trillion dollar company like Microsoft, one of the most important companies in world history and critical to the US economy? Satya Nadella should probably earn less than Simon Cowell, #64 on the Forbes list at $43.5 million in earnings. Why does Lebron James get to earn $85.5 million? The retort will always be: because James is worth it. So is an elite CEO running a massive company. The reality is that today these are normal earnings figures for people operating in elite positions where enormous economic value is in play. People in these pay arguments always intentionally devalue the knowledge, experience and skill that is required to operate a company the scale of Disney (that's how they can lay out the premise with a straight face that average worker pay to CEO pay should be low): it's one of the most difficult jobs on earth, and far more difficult and challenging than anything Jimmy Garoppolo will ever do on a football field. The average Lakers employee isn't worth 1/1000th what Lebron James is to the franchise. The average worker is not worth 1/1000th what Iger is to Disney. That's entirely correct economic math. It's that reality that irrationally upsets almost everyone, because they like to pretend it takes only modest knowledge, experience and skill to operate something like Disney, when in fact being able to do it well is a more rare talent than what the typical elite athlete represents. It's excused in sports only because supposedly that's easier to measure (and yet it still doesn't change the fact that Lebron James earns so much more than the typical worker in the Lakers organization). https://www.forbes.com/celebrities/list/ https://www.forbes.com/celebrities/list/
Erik816 8y ago
CEOs can sell stock, they just have to do it on a set schedule. So yes, it's good to incentivize their performance based on how the company performs, but it's not like it's pretend money they can't use. It's a real asset and should be considered part of their compensation.
- tathougies 8y ago
  But the valuation should not be done at market value, because the CEO cannot realistically use that value without causing his own job to be in contention. If the CEO of disney sold stock (and it would have to be reported), everyone else would too, lowering the price of disney stock (and thus his net worth). Thus, valuing his compensation at $66 mil based on the stock price is wrong for everything but taxation, because realistically, he would get much less in cash if he decided to sell.
deogeo 8y ago
> millions upon millions of peoples retirements that are that much more secure This got me curious - what proportion of corporate shares are owned by retirement funds? What proportion of shares are owned by the bottom ~90% of people by wealth?
- MuffinFlavored 8y ago
  I wonder this every day about daily stock market trade volume. What number of shares are institutional, hedge funds, retail investors, high frequency traders, etc. I hear it all of the time: "the retail investors are buying into Tesla/Netflix heavy, it's really running the price up" I really don't feel like the bottom 90% of retail investors can move the needle compared to big money, but I've never been able to prove it statistically.
- formercoder 8y ago
  This study suggests 37% https://www.taxpolicycenter.org/taxvox/only-about-one-quarter-corporate-stock-owned-taxable-shareholders https://www.taxpolicycenter.org/taxvox/only-about-one-quarte...
- jdavis703 8y ago
  The top 10 percent own 84 percent of stocks [0]. About a third of stocks are owned by various retirement instruments (pensions, IRAs, etc) [1]. These numbers don't add up because it is an apples to oranges comparison, which might not be the breakdown OP was looking for. 0: http://www.nber.org/papers/w24085 http://www.nber.org/papers/w24085 1: https://www.taxpolicycenter.org/sites/default/files/alfresco/publication-pdfs/2000790-The-Dwindling-Taxable-Share-of-U.S.-Corporate-Stock.pdf https://www.taxpolicycenter.org/sites/default/files/alfresco...
  - ImprovedSilence 8y ago
    But 84+33>100...? I know you have sources there, but something doesn’t as up. I suppose there is overlap in top 10%, and retirement accounts. Also, top 10% are a lot of people, and they are probably mostly the ones close to retirement. Not saying there’s not wealth inequality, but look towards the top .01%. Also, I have an online brokerage account that I use to invest in stock. It’s not tax deferred, or labeled as retirement fund, but it is definitely a supplement to my 401k, and I only plan to withdraw as retirement. I would wager there’s a bit of “unlabeled” money like that out there too.
jellicle 8y ago
And since the studies have shown that high-priced CEOs underperform, those Disney shareholders could have made a ton more money with a $1,000,000/year CEO. Too bad for them. Also, if the stock has no value I'll take it off him for only a small handling fee. Deal?
- tathougies 8y ago
  > Also, if the stock has no value I'll take it off him for only a small handling fee. Deal? Sure, if he gave it to you, you can be certain the stock price of disney would be lower! > And since the studies have shown that high-priced CEOs underperform, those Disney shareholders could have made a ton more money with a $1,000,000/year CEO. Too bad for them You may be right. However, the disney shareholders are free to fire the CEO at any time and I am unclear why I -- a non disney shareholder -- really ought to care if they want to waste their money.
qwerty456127 8y ago
Doesn't it mean the system is flawed by design if you can't just pass the assets you legitimately own to a 3-rd party which wants it in exchange for cash without collapsing the market and attracting prosecutors? What if he just wanted to retire buying an island, building a castle, moving there and forgetting the business, not because he believes the business isn't going to grow but because he feels it's enough for him? Or to switch to investing in a different industry (like ecology or education or whatever) not because it's going to be more profitable but because it feels more important...
- tathougies 8y ago
  > Doesn't it mean the system is flawed by design if you can't just pass the assets you legitimately own to a 3-rd party which wants it in exchange for cash without collapsing the market and attracting prosecutors? No? If you have run something of value and you have a vested stake in its interest (i.e. a share) and you decide to get rid of them because you're either uninterested in that thing or you believe your money is better spent elsewhere, isn't it right that your lack of confidence in the very thing you run sends a signal to the rest of the market? If the CEO of a non-profit decides to quit abruptly, wouldn't that make everyone rightfully worried over the future of that entity? > What if he just wanted to retire buying an island, building a castle, moving there and forgetting the business, not because he believes the business isn't going to grow but because he feels it's enough for him? Then, it's appropriate that the share price fall because the cost of transitioning leadership so abruptly will certainly affect the previously forecasted future earnings off of which the share price was established to begin with.
  - qwerty456127 8y ago
    > If the CEO of a non-profit decides to quit abruptly, wouldn't that make everyone rightfully worried over the future of that entity? It feels very reasonable to worry yet it is not totally impossible a person may happen to want to quit for no business-relevant reason. > Then, it's appropriate that the share price fall because the cost of transitioning leadership so abruptly will certainly affect the previously forecasted future earnings off of which the share price was established to begin with. Makes sense but can't the new leader be and seem much better so the prices could actually rise?
prklmn 8y ago
> it's a real disservice to say he made $Xmillion in disney stock, given that the stock has no immediate cash value to him. He can borrow against that stock and thus create immediate cash value.
- tathougies 8y ago
  You are not wrong, but he has to pay the loan back. The only way to do that would be to increase the price of the stock along with the interest rate on the loan, and then sell the stock. Of course selling the stock would decrease the price he could get for future shares. Thus, the price increase in stock he'd have to generate would have to be greater than the interest rate on the loan he took out in order to account for this share price depression.
  - smallgovt 8y ago
    There are ways to get loans where the only source of collateral are the underlying shares. For example, this is common when employees take loans out to cover the strike price of their options from their company.
    - tathougies 8y ago
      Why do people feel they need to explain basic financial vehicles? Obviously, you can get loans like this. Loans have interest, which means you must be able to generate future income suitable to cover this interest. Iger does not make enough in cash to cover the interest on a loan against his shares. Thus, he would have to generate the cash in some other way. The only foreseeable way he would have to do this is to sell disney shares, but this would cause the shares to decrease in value (and thus he would be unable to make up the principal payment). In order for such a loan to work, the loan would have to be so small as to be unimportant, or he would have to drive up the share price enough after the loan was written to make up the principle and interest, taking into account the imminent depression in share price if he attempts to sell that many shares.
      - 8y ago
megaremote 8y ago
> when the price of disney shares goes up from $24 to $135, that is millions upon millions of peoples retirements that are that much more secure Sorry, this is just rubbish. None of that money gets distributed to retirements, even if they work at Disney. What sort of lies is this? Sure, anyone that owns Disney shares does well if they sell the shares, but that is ANYONE.
- Cyph0n 8y ago
  I think he’s referring to how retirement funds are invested into index funds.
- tathougies 8y ago
  > Sorry, this is just rubbish. None of that money gets distributed to retirements, even if they work at Disney. What sort of lies is this? Disney is an S&P 500 company. Many mutual funds and retirement funds track the S&P 500 and various other indices. They do this by investing money in the public companies that make up those funds. Of course it's not just S&P 500 companies that get invested in by institutional investors. Retirement funds typically seek to generate higher returns on retirement funds from younger employees. To do this, they have to invest in riskier businesses, which typically means smaller investments in larger numbers of newer businesses. Thus, to simplify things, we can pretty much say that any public company traded on a major stock exchange can (and does) affect the price of retirement savings accounts. At the core of it, every public company, regardless of their business, is simply an investment vehicle in which people can put wealth in the hopes of competing successfully against inflation. The creation of a share price increase greater than inflation increases the wealth of the shareholders, and creates new money from thin air. This creation of money is how all people can afford retirement. Simply saving your money in an account which keeps the nominal amount of cash would lead to loss from inflation. Most people will not contribute enough money to have enough in retirement savings. Thus, they depend in some way on the creation of money by private enterprise to subsidise their retirement. This is true regardless of whether retirement accounts are self-directed (as in a 401k), centrally managed (as in a pension), or government run (as in social security). The connection to self-directed and managed accounts is obvious. Governments of course rely on the creation of money to fund tax revenue that is then put towards government retirement programs.
TaylorAlexander 8y ago
It feels to me that just because you’re the CEO doesn’t mean you’re singlehandedly responsible for all that wealth being created. A whole bunch of employees worked really hard to raise that stock price, and they’re not even being paid a living wage. Some of them can’t afford an apartment and live in their cars. I don’t believe the CEO caused all of that rise in the stock, and the issue is whether one person should even be in a position to benefit that much while others get a meager salary. Why does the CEO get so many thousands of shares of Disney stock rather than a large portion of that package going to the many thousands of workers that also helped the company grow in value? Just as you say it makes sense to align the CEOs interests, the same is true for every worker at the company. And one very committed CEO is great, but thousands of appreciated workers who can afford to live would be great for the company too.
- tathougies 8y ago
  > A whole bunch of employees worked really hard to raise that stock price, and they’re not even being paid a living wage. Some of them can’t afford an apartment and live in their cars. But the CEO was only paid $3million in cash, which is a different order of magnitude in wage multiplier when compared with the lowest employee. I'm unsure what the stock distribution program that disney may or may not have to employees. I actually have no doubt that disney shortchanges their lowest level employees. But, that is not the question at hand. The company is being asked to provide equivalent wages. To do that, the lowest level employees would get paid cash + stock. That would allow us to make a fairer comparison, but it would not look like what the article wants. > Why does the CEO get so many thousands of shares of Disney stock rather than a large portion of that package going to the many thousands of workers that also helped the company grow in value? Morally, I don't disagree with you, but this is certainly not what people mean when they make these wage comparisons. Can you imagine if an employee got minimum wage + hundreds of stock? Most people would think that is the company short changing the employee. > I don’t believe the CEO caused all of that rise in the stock, and the issue is whether one person should even be in a position to benefit that much while others get a meager salary. The shareholders of disney think so. Perhaps he did not. I don't know. They are free to fire him if they don't like him.
- polishTar 8y ago
magicalist 8y ago
> Nevertheless, Iger couldn't sell this much stock without either being accused of insider trading (since such a large sale would surely manipulate the stock price), and the SECs regulations on insider trading are very strict (they prosecute based on the appearance of insider trading). Lol, this is bullshit and pretending you know what you're talking about does a disservice to this conversation. You'd know this was bullshit if you did even a basic search, which would have alerted you to the fact that Iger has sold more than this in stock before. Disney's market cap is gigantic, this would be a blip in the daily trade volume. He just has to schedule the sale and it's no problem.
0815test 8y ago
> What people forget in the debate over public company 'CEOs' is that, when the price of disney shares goes up from $24 to $135, that is millions upon millions of peoples retirements that are that much more secure. I would happily accept that argument if we were talking about other sectors of the economy. Copyright trolling and rent-seeking in general, however, are not value-creating activities; on the contrary, they actively destroy value and wealth. For each person whose retirement has been "made more secure" by such a business, many more have been made substantially worse off.
- tathougies 8y ago
  Disney is copyright trolling? (This is a genuine question). Disney definitely enforces its own copyrights and intellectual property, but seeing as it created those ideas (like Mickey Mouse, etc), I'm not sure how you can call enforcing copies of this idea 'copyright trolling'. It seems only right that the company that made the cartoon profit off of its likeness. The government has perfectly reasonable regulation when others want to use likenesses or movie clips for 'fair use'.
  - 0815test 8y ago
    > seeing as it created those ideas (like Mickey Mouse, etc) Mickey Mouse, perhaps[0]. Many other Disney characters and broad ideas were ripped off of public domain work (sometimes it's even more complicated, see Winnie the Pooh - the original character was created by someone else and later licensed to Disney, but there certainly was a lot of subsequent controversy about the precise terms of that licensing deal!) with Disney then laying proprietary claims on them, and also lobbying for extended protections on their newly-proprietarized forms. That's a particularly obnoxious form of copyright trolling. [0] Though, in many ways, Mickey Mouse is simply a technically-simplified form (serving the new medium of cartoon animation, which Walt Disney was then experimenting with) of an existing genre of cartoon/comic anthropomorphic mice (of which 'Teddy Tail' is the best-documented representative). Serendipitously, the changes - although introduced for merely technical reasons - also made the character a lot more popular, for the same reason why ubercheap anime characters from Japan are popular - humans are attracted to simple forms, symmetry and easily-read neotenous traits, and repelled by complexity and artistry. So Walt Disney had a good intuition to start with, but his creative success was for the most part a matter of serendipity and being in the right place. No way his character is worth billions of dollars - no anthropomorphic mouse in the freakin' noosphere is! /s
dragonwriter 8y ago
> when the price of disney shares goes up from $24 to $135, that is millions upon millions of peoples retirements that are that much more secure If by “that much” you mean “not much”, sure; there may be millions of people with retirement funds in the stock market, but not millions that are significantly exposed to Disney.

starpilot 8y ago

Why is any success that company experiences attributed to the CEO's actions? Warren Buffett said that when a business known for difficulty encounters a manager known for brilliance, it's the reputation of the business that remains. We saw this when an ex-Apple retailer tried to revive JC Penney, and when Marissa Mayer was at the helm of Yahoo. These companies died in spite of their management, how do we know that it is not the same for when they succeed?

tathougies 8y ago
And yet, Berkshire Hathaway, a textile manufacturer, was able to become a global conglomerate because of the leadership of one man? The cases you mention show exactly the issue with having a poor CEO. The fact is both of these managers attempted to keep their companies in markets in which they could not make money. It is useful to think of a CEO not as a day-to-day operations manager, but rather as an institutional investor charged with seeking a larger return on the money invested in their fund by engaging in direct business transactions (rather than purchasing shares for example). In this sense, both JCP and Yahoo failed to manage their money properly. (BTW, being Marissa Mayer or an 'ex-apple retailer' does not make one a good CEO, as demonstrated by your examples)
- k_sze 8y ago
  I haven’t really followed JCP and Yahoo, but who actually made the decision “to keep their companies in markets in which they could not make money”? Was it the CEO or the board of directors? If it was the board that made the decision, then can we really blame the CEO?
csallen 8y ago
Your assumption is that the management was good despite their failures. It's quite possible that they simply didn't perform well or make great decisions, despite their reputations.

georgeecollins 8y ago

Two points: A CEO should certainly be well rewarded for a companies growth. Should it be 1500 times the average worker? During the period of the fastest US GDP growth that ratio was at least 10 times less so maybe the ratio could be lower. CEOs in the US buy back stock a lot these days. That naturally raises the price and doesn’t take a lot of skill or vision. Maybe it is a good idea (it depends) but do you really need to give out lavish compensation when you can manipulate the price?

adventured 8y ago
Jimmy Garoppolo is a mere #90 on the last Forbes Entertainers list, for most earnings for 2018 (Jun 2017 - Jun 2018). He made $36 million. Why should he be allowed to make 900 times what the janitor in the stadium does? He's not even going to be a consequential QB. We should pass a law that says no QB may earn more than $300,000. Adam Sandler earned $39.5 million to produce some mediocrity. We should obviously make that illegal, right? So if you run a $223 billion company like Disney, you should earn 1/20th what Adam Sandler does to squeeze out a few bad movies for Netflix. How about running a trillion dollar company like Microsoft, one of the most important companies in world history and critical to the US economy? Satya Nadella should probably earn less than Simon Cowell, #64 on the Forbes list at $43.5 million in earnings. Why does Lebron James get to earn $85.5 million? The retort will always be: because James is worth it. So is an elite CEO running a massive company. The reality is that today these are normal earnings figures for people operating in elite positions where enormous economic value is in play. People in these pay arguments always intentionally devalue the knowledge, experience and skill that is required to operate a company the scale of Disney (that's how they can lay out the premise with a straight face that average worker pay to CEO pay should be low): it's one of the most difficult jobs on earth, and far more difficult and challenging than anything Jimmy Garoppolo will ever do on a football field. The average Lakers employee isn't worth 1/1000th what Lebron James is to the franchise. The average worker is not worth 1/1000th what Iger is to Disney. That's entirely correct economic math. It's that reality that irrationally upsets almost everyone, because they like to pretend it takes only modest knowledge, experience and skill to operate something like Disney, when in fact being able to do it well is a more rare talent than what the typical elite athlete represents. It's excused in sports only because supposedly that's easier to measure (and yet it still doesn't change the fact that Lebron James earns so much more than the typical worker in the Lakers organization). https://www.forbes.com/celebrities/list/ https://www.forbes.com/celebrities/list/

Erik816 8y ago

CEOs can sell stock, they just have to do it on a set schedule. So yes, it's good to incentivize their performance based on how the company performs, but it's not like it's pretend money they can't use. It's a real asset and should be considered part of their compensation.

tathougies 8y ago
But the valuation should not be done at market value, because the CEO cannot realistically use that value without causing his own job to be in contention. If the CEO of disney sold stock (and it would have to be reported), everyone else would too, lowering the price of disney stock (and thus his net worth). Thus, valuing his compensation at $66 mil based on the stock price is wrong for everything but taxation, because realistically, he would get much less in cash if he decided to sell.

deogeo 8y ago

> millions upon millions of peoples retirements that are that much more secure This got me curious - what proportion of corporate shares are owned by retirement funds? What proportion of shares are owned by the bottom ~90% of people by wealth?

MuffinFlavored 8y ago
I wonder this every day about daily stock market trade volume. What number of shares are institutional, hedge funds, retail investors, high frequency traders, etc. I hear it all of the time: "the retail investors are buying into Tesla/Netflix heavy, it's really running the price up" I really don't feel like the bottom 90% of retail investors can move the needle compared to big money, but I've never been able to prove it statistically.
formercoder 8y ago
This study suggests 37% https://www.taxpolicycenter.org/taxvox/only-about-one-quarter-corporate-stock-owned-taxable-shareholders https://www.taxpolicycenter.org/taxvox/only-about-one-quarte...
jdavis703 8y ago
The top 10 percent own 84 percent of stocks [0]. About a third of stocks are owned by various retirement instruments (pensions, IRAs, etc) [1]. These numbers don't add up because it is an apples to oranges comparison, which might not be the breakdown OP was looking for. 0: http://www.nber.org/papers/w24085 http://www.nber.org/papers/w24085 1: https://www.taxpolicycenter.org/sites/default/files/alfresco/publication-pdfs/2000790-The-Dwindling-Taxable-Share-of-U.S.-Corporate-Stock.pdf https://www.taxpolicycenter.org/sites/default/files/alfresco...
- ImprovedSilence 8y ago
  But 84+33>100...? I know you have sources there, but something doesn’t as up. I suppose there is overlap in top 10%, and retirement accounts. Also, top 10% are a lot of people, and they are probably mostly the ones close to retirement. Not saying there’s not wealth inequality, but look towards the top .01%. Also, I have an online brokerage account that I use to invest in stock. It’s not tax deferred, or labeled as retirement fund, but it is definitely a supplement to my 401k, and I only plan to withdraw as retirement. I would wager there’s a bit of “unlabeled” money like that out there too.

jellicle 8y ago

And since the studies have shown that high-priced CEOs underperform, those Disney shareholders could have made a ton more money with a $1,000,000/year CEO. Too bad for them. Also, if the stock has no value I'll take it off him for only a small handling fee. Deal?

tathougies 8y ago
> Also, if the stock has no value I'll take it off him for only a small handling fee. Deal? Sure, if he gave it to you, you can be certain the stock price of disney would be lower! > And since the studies have shown that high-priced CEOs underperform, those Disney shareholders could have made a ton more money with a $1,000,000/year CEO. Too bad for them You may be right. However, the disney shareholders are free to fire the CEO at any time and I am unclear why I -- a non disney shareholder -- really ought to care if they want to waste their money.

qwerty456127 8y ago

Doesn't it mean the system is flawed by design if you can't just pass the assets you legitimately own to a 3-rd party which wants it in exchange for cash without collapsing the market and attracting prosecutors? What if he just wanted to retire buying an island, building a castle, moving there and forgetting the business, not because he believes the business isn't going to grow but because he feels it's enough for him? Or to switch to investing in a different industry (like ecology or education or whatever) not because it's going to be more profitable but because it feels more important...

tathougies 8y ago
> Doesn't it mean the system is flawed by design if you can't just pass the assets you legitimately own to a 3-rd party which wants it in exchange for cash without collapsing the market and attracting prosecutors? No? If you have run something of value and you have a vested stake in its interest (i.e. a share) and you decide to get rid of them because you're either uninterested in that thing or you believe your money is better spent elsewhere, isn't it right that your lack of confidence in the very thing you run sends a signal to the rest of the market? If the CEO of a non-profit decides to quit abruptly, wouldn't that make everyone rightfully worried over the future of that entity? > What if he just wanted to retire buying an island, building a castle, moving there and forgetting the business, not because he believes the business isn't going to grow but because he feels it's enough for him? Then, it's appropriate that the share price fall because the cost of transitioning leadership so abruptly will certainly affect the previously forecasted future earnings off of which the share price was established to begin with.
- qwerty456127 8y ago
  > If the CEO of a non-profit decides to quit abruptly, wouldn't that make everyone rightfully worried over the future of that entity? It feels very reasonable to worry yet it is not totally impossible a person may happen to want to quit for no business-relevant reason. > Then, it's appropriate that the share price fall because the cost of transitioning leadership so abruptly will certainly affect the previously forecasted future earnings off of which the share price was established to begin with. Makes sense but can't the new leader be and seem much better so the prices could actually rise?

prklmn 8y ago

> it's a real disservice to say he made $Xmillion in disney stock, given that the stock has no immediate cash value to him. He can borrow against that stock and thus create immediate cash value.

tathougies 8y ago
You are not wrong, but he has to pay the loan back. The only way to do that would be to increase the price of the stock along with the interest rate on the loan, and then sell the stock. Of course selling the stock would decrease the price he could get for future shares. Thus, the price increase in stock he'd have to generate would have to be greater than the interest rate on the loan he took out in order to account for this share price depression.
- smallgovt 8y ago
  There are ways to get loans where the only source of collateral are the underlying shares. For example, this is common when employees take loans out to cover the strike price of their options from their company.
  - tathougies 8y ago
    Why do people feel they need to explain basic financial vehicles? Obviously, you can get loans like this. Loans have interest, which means you must be able to generate future income suitable to cover this interest. Iger does not make enough in cash to cover the interest on a loan against his shares. Thus, he would have to generate the cash in some other way. The only foreseeable way he would have to do this is to sell disney shares, but this would cause the shares to decrease in value (and thus he would be unable to make up the principal payment). In order for such a loan to work, the loan would have to be so small as to be unimportant, or he would have to drive up the share price enough after the loan was written to make up the principle and interest, taking into account the imminent depression in share price if he attempts to sell that many shares.
    - 8y ago

megaremote 8y ago

> when the price of disney shares goes up from $24 to $135, that is millions upon millions of peoples retirements that are that much more secure Sorry, this is just rubbish. None of that money gets distributed to retirements, even if they work at Disney. What sort of lies is this? Sure, anyone that owns Disney shares does well if they sell the shares, but that is ANYONE.

Cyph0n 8y ago
I think he’s referring to how retirement funds are invested into index funds.
tathougies 8y ago
> Sorry, this is just rubbish. None of that money gets distributed to retirements, even if they work at Disney. What sort of lies is this? Disney is an S&P 500 company. Many mutual funds and retirement funds track the S&P 500 and various other indices. They do this by investing money in the public companies that make up those funds. Of course it's not just S&P 500 companies that get invested in by institutional investors. Retirement funds typically seek to generate higher returns on retirement funds from younger employees. To do this, they have to invest in riskier businesses, which typically means smaller investments in larger numbers of newer businesses. Thus, to simplify things, we can pretty much say that any public company traded on a major stock exchange can (and does) affect the price of retirement savings accounts. At the core of it, every public company, regardless of their business, is simply an investment vehicle in which people can put wealth in the hopes of competing successfully against inflation. The creation of a share price increase greater than inflation increases the wealth of the shareholders, and creates new money from thin air. This creation of money is how all people can afford retirement. Simply saving your money in an account which keeps the nominal amount of cash would lead to loss from inflation. Most people will not contribute enough money to have enough in retirement savings. Thus, they depend in some way on the creation of money by private enterprise to subsidise their retirement. This is true regardless of whether retirement accounts are self-directed (as in a 401k), centrally managed (as in a pension), or government run (as in social security). The connection to self-directed and managed accounts is obvious. Governments of course rely on the creation of money to fund tax revenue that is then put towards government retirement programs.

TaylorAlexander 8y ago

It feels to me that just because you’re the CEO doesn’t mean you’re singlehandedly responsible for all that wealth being created. A whole bunch of employees worked really hard to raise that stock price, and they’re not even being paid a living wage. Some of them can’t afford an apartment and live in their cars. I don’t believe the CEO caused all of that rise in the stock, and the issue is whether one person should even be in a position to benefit that much while others get a meager salary. Why does the CEO get so many thousands of shares of Disney stock rather than a large portion of that package going to the many thousands of workers that also helped the company grow in value? Just as you say it makes sense to align the CEOs interests, the same is true for every worker at the company. And one very committed CEO is great, but thousands of appreciated workers who can afford to live would be great for the company too.

tathougies 8y ago
> A whole bunch of employees worked really hard to raise that stock price, and they’re not even being paid a living wage. Some of them can’t afford an apartment and live in their cars. But the CEO was only paid $3million in cash, which is a different order of magnitude in wage multiplier when compared with the lowest employee. I'm unsure what the stock distribution program that disney may or may not have to employees. I actually have no doubt that disney shortchanges their lowest level employees. But, that is not the question at hand. The company is being asked to provide equivalent wages. To do that, the lowest level employees would get paid cash + stock. That would allow us to make a fairer comparison, but it would not look like what the article wants. > Why does the CEO get so many thousands of shares of Disney stock rather than a large portion of that package going to the many thousands of workers that also helped the company grow in value? Morally, I don't disagree with you, but this is certainly not what people mean when they make these wage comparisons. Can you imagine if an employee got minimum wage + hundreds of stock? Most people would think that is the company short changing the employee. > I don’t believe the CEO caused all of that rise in the stock, and the issue is whether one person should even be in a position to benefit that much while others get a meager salary. The shareholders of disney think so. Perhaps he did not. I don't know. They are free to fire him if they don't like him.
polishTar 8y ago

magicalist 8y ago

> Nevertheless, Iger couldn't sell this much stock without either being accused of insider trading (since such a large sale would surely manipulate the stock price), and the SECs regulations on insider trading are very strict (they prosecute based on the appearance of insider trading). Lol, this is bullshit and pretending you know what you're talking about does a disservice to this conversation. You'd know this was bullshit if you did even a basic search, which would have alerted you to the fact that Iger has sold more than this in stock before. Disney's market cap is gigantic, this would be a blip in the daily trade volume. He just has to schedule the sale and it's no problem.

0815test 8y ago

> What people forget in the debate over public company 'CEOs' is that, when the price of disney shares goes up from $24 to $135, that is millions upon millions of peoples retirements that are that much more secure. I would happily accept that argument if we were talking about other sectors of the economy. Copyright trolling and rent-seeking in general, however, are not value-creating activities; on the contrary, they actively destroy value and wealth. For each person whose retirement has been "made more secure" by such a business, many more have been made substantially worse off.

tathougies 8y ago
Disney is copyright trolling? (This is a genuine question). Disney definitely enforces its own copyrights and intellectual property, but seeing as it created those ideas (like Mickey Mouse, etc), I'm not sure how you can call enforcing copies of this idea 'copyright trolling'. It seems only right that the company that made the cartoon profit off of its likeness. The government has perfectly reasonable regulation when others want to use likenesses or movie clips for 'fair use'.
- 0815test 8y ago
  > seeing as it created those ideas (like Mickey Mouse, etc) Mickey Mouse, perhaps[0]. Many other Disney characters and broad ideas were ripped off of public domain work (sometimes it's even more complicated, see Winnie the Pooh - the original character was created by someone else and later licensed to Disney, but there certainly was a lot of subsequent controversy about the precise terms of that licensing deal!) with Disney then laying proprietary claims on them, and also lobbying for extended protections on their newly-proprietarized forms. That's a particularly obnoxious form of copyright trolling. [0] Though, in many ways, Mickey Mouse is simply a technically-simplified form (serving the new medium of cartoon animation, which Walt Disney was then experimenting with) of an existing genre of cartoon/comic anthropomorphic mice (of which 'Teddy Tail' is the best-documented representative). Serendipitously, the changes - although introduced for merely technical reasons - also made the character a lot more popular, for the same reason why ubercheap anime characters from Japan are popular - humans are attracted to simple forms, symmetry and easily-read neotenous traits, and repelled by complexity and artistry. So Walt Disney had a good intuition to start with, but his creative success was for the most part a matter of serendipity and being in the right place. No way his character is worth billions of dollars - no anthropomorphic mouse in the freakin' noosphere is! /s

dragonwriter 8y ago

> when the price of disney shares goes up from $24 to $135, that is millions upon millions of peoples retirements that are that much more secure If by “that much” you mean “not much”, sure; there may be millions of people with retirement funds in the stock market, but not millions that are significantly exposed to Disney.