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It's the principal-agent problem - http://en.wikipedia.org/wiki/Principal-agent_problem http://en.wikipedia.org/wiki/Principal-agent_problem You could find a l

It's the principal-agent problem - http://en.wikipedia.org/wiki/Principal-agent_problem http://en.wikipedia.org/wiki/Principal-agent_problem You could find a lot of capable people willing to do the job for a lot less. But if you pay them a fixed salary, even $1m, that isn't directly linked to the performance you're looking for, then the game is to avoid anything too risky, even if the expected value is very high, if it might endanger the CEO's job. The game would be to take the minimum risk and do well enough to not get fired, and that's it. If Tim Cook manages to double the stock price, he'll have $700m. If it drops to $100, he'll have $100m. It's a big difference, and his interests and risks are aligned with the shareholders. Anyway, that's the theory. Give too much stock, and you're impoverishing the shareholders for little benefit. Don't give enough, and a superstar might decide he'd rather do a startup or an incubator LOL, or he may not want to pursue the same kind of risk-reward as the people who hire him. $100m is still a great deal of money. I guess going to $700m, it's the difference between superrich for life, and a legacy of being a great leader and dynastic wealth LOL. Nice work if you can get it.

cabalamat 15y ago
> If Tim Cook manages to double the stock price, he'll have $700m. If it drops to $100, he'll have $100m. It's a big difference Is it? I would imagine the lifestyle one could afford with $100M is identical to that with $700M.
- spitfire 15y ago
  You can't afford a decent jet, a yacht and houses on $100M. On $700M you can. small jets start in the single digit millions. Decent jets (10+ people) are $50M easily, costing $1M+ a year. yachts can get extreme. Add in a few homes throughout the world and you've burnt through that $100M easily. Think of it as comparing a toyota to a bentley.
  - ugh 15y ago
    You can buy better toys but I very much doubt that the quality of life improves much. The difference between $100m and $700m is at any rate much, much smaller than the difference between $15m and $100m. Maybe that’s why so much has to be payed. A million or so more doesn’t cut it.
    - redthrowaway 15y ago
      I don't know about that. There's a lot of things I'd like to do that would be possible with $5b that wouldn't be possible with $500m. I could start a good ISP, or make a big stab at commercializing spaceflight, or attempt a viable and powerful mind-machine interface... Big Money buys Big Things, and if I were in Cook's position I'd care less about yachts and more about really damned cool things that I could do with that kind of cash.
      - RuadhanMc 15y ago
        $500m would be more than sufficient to do all of those things you've outlined. If you can put up 25% (random percent) of the money then you'd be able to get investors to put in the rest. Only a nut would invest the entire amount themselves. But that aside, we're talking here about quality of life which does not equal being able to pay for the craziest most expensive ideas that you can come up with.
        redthrowaway 15y ago
        >Only a nut would invest the entire amount themselves. Not everything I'd want to do would have an immediate commercial payoff, which would rule out investors. That, in turn, would rule out anyone else doing it, which is why having a wealthy backer is necessary. >But that aside, we're talking here about quality of life which does not equal being able to pay for the craziest most expensive ideas that you can come up with. If I'm retired, the ability to do those things would be a huge influence on quality of life for me.
        cabalamat 15y ago
  - jamesbritt 15y ago
    "Money doesn't make you happy. I now have $50 million but I was just as happy when I had $48 million." -- Arnold Schwarzenegger
    - beedogs 15y ago
      he never had $700m though.
6ren 15y ago
BTW: If Tim Cook can show that Apple can succeed without Steve Jobs (e.g. by launching something amazing in the next couple months), the stock could easily double, because it has been discounted by the predicted effect of Jobs leaving.
- 2muchcoffeeman 15y ago
  Good thing Steve stepped down just before the fall line up! Genius move.
  - wmf 15y ago
    Yeah, when Apple ships something in September the press will say "I guess they can survive without Steve" even though those products have been ready to go for a while.
    - Steko 15y ago
      It could actually be that Steve's health has not changed radically but it's a move he needed to make sooner or later and he has huge confidence in the upcoming product cycle to cement Tim's new role.
      - gxs 15y ago
        I don't typically like to spread rumors, but I work as a bartender in Walnut Creek, CA and a guest that claimed to have close mutual friends with Steve said it was defintely because of his health. I obviously can't substantiate her claim, but she seemed extremely sad and elaborated quite a bit. I definitely hope she is wrong and wish him the best.
    - Hawramani 15y ago
      @Steko: I saw a supposedly new, and saddening, photo of Steve Jobs in which he looks emaciated. Maybe it is the way he is dressed that makes him look so much worse than what we are used to. I found the photo: http://ll-media.tmz.com/2011/08/26/0826-steve-jobs-02pcn-credit-1.jpg http://ll-media.tmz.com/2011/08/26/0826-steve-jobs-02pcn-cre...
eneveu 15y ago
What does "LOL" mean in this context? I've googled it, but it's hard to find the appropriate meaning, since search results seem to focus on the "laughing out loud" sense... "Limit of Liability" was the closest meaning I could find on the Wikipedia disambiguation page ( http://en.wikipedia.org/wiki/LOL_(disambiguation) http://en.wikipedia.org/wiki/LOL_(disambiguation) ), but it doesn't seem to fit in this context.
- sneak 15y ago
  Best translation I can think of: "ha ha only serious" He is using it as the word that the Laughing Out Loud initialism became, which has slightly different usage and meaning. (e.g. in the common phrase "I did it for the lulz.")
  - eneveu 15y ago
    Oh ok. I'm not a native English speaker, and I thought from the context that it was an abbreviation related to business / investing which I didn't know about. Thanks!
- jedberg 15y ago
  I think it means Laugh out Loud in this context.
  - eneveu 15y ago
    Yep. It didn't seem to fit the context upon first read, but I think you are right. Thanks!

cabalamat 15y ago

> If Tim Cook manages to double the stock price, he'll have $700m. If it drops to $100, he'll have $100m. It's a big difference Is it? I would imagine the lifestyle one could afford with $100M is identical to that with $700M.

spitfire 15y ago
You can't afford a decent jet, a yacht and houses on $100M. On $700M you can. small jets start in the single digit millions. Decent jets (10+ people) are $50M easily, costing $1M+ a year. yachts can get extreme. Add in a few homes throughout the world and you've burnt through that $100M easily. Think of it as comparing a toyota to a bentley.
- ugh 15y ago
  You can buy better toys but I very much doubt that the quality of life improves much. The difference between $100m and $700m is at any rate much, much smaller than the difference between $15m and $100m. Maybe that’s why so much has to be payed. A million or so more doesn’t cut it.
  - redthrowaway 15y ago
    I don't know about that. There's a lot of things I'd like to do that would be possible with $5b that wouldn't be possible with $500m. I could start a good ISP, or make a big stab at commercializing spaceflight, or attempt a viable and powerful mind-machine interface... Big Money buys Big Things, and if I were in Cook's position I'd care less about yachts and more about really damned cool things that I could do with that kind of cash.
    - RuadhanMc 15y ago
      $500m would be more than sufficient to do all of those things you've outlined. If you can put up 25% (random percent) of the money then you'd be able to get investors to put in the rest. Only a nut would invest the entire amount themselves. But that aside, we're talking here about quality of life which does not equal being able to pay for the craziest most expensive ideas that you can come up with.
      - redthrowaway 15y ago
        >Only a nut would invest the entire amount themselves. Not everything I'd want to do would have an immediate commercial payoff, which would rule out investors. That, in turn, would rule out anyone else doing it, which is why having a wealthy backer is necessary. >But that aside, we're talking here about quality of life which does not equal being able to pay for the craziest most expensive ideas that you can come up with. If I'm retired, the ability to do those things would be a huge influence on quality of life for me.
        cabalamat 15y ago
- jamesbritt 15y ago
  "Money doesn't make you happy. I now have $50 million but I was just as happy when I had $48 million." -- Arnold Schwarzenegger
  - beedogs 15y ago
    he never had $700m though.

6ren 15y ago

BTW: If Tim Cook can show that Apple can succeed without Steve Jobs (e.g. by launching something amazing in the next couple months), the stock could easily double, because it has been discounted by the predicted effect of Jobs leaving.

2muchcoffeeman 15y ago
Good thing Steve stepped down just before the fall line up! Genius move.
- wmf 15y ago
  Yeah, when Apple ships something in September the press will say "I guess they can survive without Steve" even though those products have been ready to go for a while.
  - Steko 15y ago
    It could actually be that Steve's health has not changed radically but it's a move he needed to make sooner or later and he has huge confidence in the upcoming product cycle to cement Tim's new role.
    - gxs 15y ago
      I don't typically like to spread rumors, but I work as a bartender in Walnut Creek, CA and a guest that claimed to have close mutual friends with Steve said it was defintely because of his health. I obviously can't substantiate her claim, but she seemed extremely sad and elaborated quite a bit. I definitely hope she is wrong and wish him the best.
  - Hawramani 15y ago
    @Steko: I saw a supposedly new, and saddening, photo of Steve Jobs in which he looks emaciated. Maybe it is the way he is dressed that makes him look so much worse than what we are used to. I found the photo: http://ll-media.tmz.com/2011/08/26/0826-steve-jobs-02pcn-credit-1.jpg http://ll-media.tmz.com/2011/08/26/0826-steve-jobs-02pcn-cre...

eneveu 15y ago

What does "LOL" mean in this context? I've googled it, but it's hard to find the appropriate meaning, since search results seem to focus on the "laughing out loud" sense... "Limit of Liability" was the closest meaning I could find on the Wikipedia disambiguation page ( http://en.wikipedia.org/wiki/LOL_(disambiguation) http://en.wikipedia.org/wiki/LOL_(disambiguation) ), but it doesn't seem to fit in this context.

sneak 15y ago
Best translation I can think of: "ha ha only serious" He is using it as the word that the Laughing Out Loud initialism became, which has slightly different usage and meaning. (e.g. in the common phrase "I did it for the lulz.")
- eneveu 15y ago
  Oh ok. I'm not a native English speaker, and I thought from the context that it was an abbreviation related to business / investing which I didn't know about. Thanks!
jedberg 15y ago
I think it means Laugh out Loud in this context.
- eneveu 15y ago
  Yep. It didn't seem to fit the context upon first read, but I think you are right. Thanks!