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> If the CEO of the world's first trillion dollar company can't make a lot of money, then who can? Isn't this completely contradicted by > It's a free market.

by josefx 5y ago

> If the CEO of the world's first trillion dollar company can't make a lot of money, then who can? Isn't this completely contradicted by > It's a free market. ? Wouldn't you expect that a company operating on free market principles went for a good but cheap option? Instead when you look at these companies it is always people born rich and well connected. Even better when you include Theranos, you can have a family history of con artists and the people in these circles will still throw money at you for decades. I would say the market for CEOs is about as free as an Italian getting a pair of custom concrete boots by the local mafia. Edit: Just checked Cook actually doesn't seem to come from a family that rich. So used to it and when I write a comment I manage to refer to the one guy who wasn't born rich.

dragonwriter 5y ago
> Wouldn't you expect that a company operating on free market principles went for a good but cheap option? In an ideal competitive free market, there is no “good, but cheap” option; the marginal cost equals the marginal value delivered.
- manicdee 5y ago
  Not really. In this case there is also a huge serving of sunk cost fallacy: how will we cope if Tim leaves? What unique value does Tim bring to Apple that someone else can’t? Apple has been missing Steve Jobs’ pedantic attention to detail for a while, perhaps Apple would actually be better off with someone else? But they aren’t going to try because they don’t want to spend the effort looking.
  - thatguy0900 5y ago
    Apple is the first company in the world to hit 3t and under Steve's care. Saying they haven't replaced him because they haven't bothered looking is absurd. Why bother fucking with the most valuable company in the world. That's like saying LeBron James is only on the team because no ones bothered to find anyone better.
tshaddox 5y ago
Also, free market doesn’t mean you’re not allowed to get upset about anything that happens.
barry-cotter 5y ago
When the news broke Steve Ballmer was stepping down Microsoft stock jumped $2 billion. If it’s possible to be worth -$2 billion it’s possible to be worth $100 million.
- ckastner 5y ago
  It remember that is was far more than that. Without having invested too much time into this, Microsoft's market cap back then was around $270bn, and the stock rose by around 7% on 2013-08-23, the day is retirement plans were announced. So the stock jumped close to $20bn. Historical prices according to Yahoo on 2013-08-23: closed at 34.75, previous close was 32.39.
- itsdrewmiller 5y ago
  I haven’t read the article, but I assume it is 100mm annually not a lifetime achievement award.
tomcam 5y ago
> Wouldn't you expect that a company operating on free market principles went for a good but cheap option? I do not follow that logic. Why should they choose to make less money?
vmception 5y ago
> Wouldn't you expect that a company operating on free market principles went for a good but cheap option? No, I expect it to do what the market can bear. “The market“ can be a single person and single entity, a trade between two market participants where of course, any price is a market-good price. Good simply meaning a transaction occurred and settled, while bad meaning it did not. Those are my expectations. Doesn't mean thats what I would do or negotiate or whether I would mildly chuckle at what was negotiated.
andriesm 5y ago
Yes thinking that good CEOs would be cheap in a free market shows you have essentially ZERO understanding of basic economics, just like the author who thinks there is a specific ratio that CEO pay is not allowed to be relative to the average employee, which is obviously weighed by the large number of lower level employees. The fact that Tim Cook ONLY costs 1447 times what an average employee costs is a real bargain. There are 10s of 1000s of average employees. There was effectively only one Steve Jobs until Tim Cook proved he could be Tim Cook, and as a shareholder I would not want you to try and nickle&dime the guy who has created so much value for shareholders. Yes, the CEO is the chief value creator because ultimately he decides who remains at Apple, he sets the overall strategy and HE has to take full and final responsibility in front of shareholders for all results good or bad. Mr Middle Manager or Mr Programmer is not going to be called in by the board to explain any problems with profits or growth. Mr Programmer is important but there are more people that can do his job as well as him, as there are people who have a proven track record running an Apple or similar. Shareholders that buy Apple stock do so at least in part because Tim Cook is the CEO. Sure I first look at the business fundamentals and the valuation, but Tim Cook's proven track record is a major part. Go watch Buffet interviews on YouTube to hear how highly he rates Tim Cook. I've never heard Warren Argue that Tim is overpaid, and yet Warren is a very large shareholder. It's easy for people with very little stake in Apple to have strong opinions about what the Apple CEO should be paid. If shareholders buy Apple stock in part because Tim Cook is the CEO and not some new unproven person of dubious merit, how much is he worth paying? A lot
- WalterBright 5y ago
  I hold some Apple stock, and I'm not revolting.
  - ejoso 5y ago
    I’m glad you’re not revolting. That sounds like it would be a bummer.
    - WalterBright 5y ago
      I do shower at least once a month.
deleted 5y ago
[deleted]
Decker87 5y ago
So just to get this straight: you argued that Tim Cook only got there via his rich family, even before you knew whether that was true.
- josefx 5y ago
  I may be a bit jaded, a lot of rich people like to pretend they where poor and that their success is entirely self made. Stories like Theranos reinforce the image that the social circles are mostly static and unchanging no matter what the people involved are up to. I checked a bit late in this case but oce I saw some sparse evidence to the contrary in this case I corrected myself.

by josefx 5y ago

dragonwriter 5y ago

> Wouldn't you expect that a company operating on free market principles went for a good but cheap option? In an ideal competitive free market, there is no “good, but cheap” option; the marginal cost equals the marginal value delivered.

manicdee 5y ago
Not really. In this case there is also a huge serving of sunk cost fallacy: how will we cope if Tim leaves? What unique value does Tim bring to Apple that someone else can’t? Apple has been missing Steve Jobs’ pedantic attention to detail for a while, perhaps Apple would actually be better off with someone else? But they aren’t going to try because they don’t want to spend the effort looking.
- thatguy0900 5y ago
  Apple is the first company in the world to hit 3t and under Steve's care. Saying they haven't replaced him because they haven't bothered looking is absurd. Why bother fucking with the most valuable company in the world. That's like saying LeBron James is only on the team because no ones bothered to find anyone better.

tshaddox 5y ago

Also, free market doesn’t mean you’re not allowed to get upset about anything that happens.

barry-cotter 5y ago

When the news broke Steve Ballmer was stepping down Microsoft stock jumped $2 billion. If it’s possible to be worth -$2 billion it’s possible to be worth $100 million.

ckastner 5y ago
It remember that is was far more than that. Without having invested too much time into this, Microsoft's market cap back then was around $270bn, and the stock rose by around 7% on 2013-08-23, the day is retirement plans were announced. So the stock jumped close to $20bn. Historical prices according to Yahoo on 2013-08-23: closed at 34.75, previous close was 32.39.
itsdrewmiller 5y ago
I haven’t read the article, but I assume it is 100mm annually not a lifetime achievement award.

tomcam 5y ago

> Wouldn't you expect that a company operating on free market principles went for a good but cheap option? I do not follow that logic. Why should they choose to make less money?

vmception 5y ago

> Wouldn't you expect that a company operating on free market principles went for a good but cheap option? No, I expect it to do what the market can bear. “The market“ can be a single person and single entity, a trade between two market participants where of course, any price is a market-good price. Good simply meaning a transaction occurred and settled, while bad meaning it did not. Those are my expectations. Doesn't mean thats what I would do or negotiate or whether I would mildly chuckle at what was negotiated.

andriesm 5y ago

Yes thinking that good CEOs would be cheap in a free market shows you have essentially ZERO understanding of basic economics, just like the author who thinks there is a specific ratio that CEO pay is not allowed to be relative to the average employee, which is obviously weighed by the large number of lower level employees. The fact that Tim Cook ONLY costs 1447 times what an average employee costs is a real bargain. There are 10s of 1000s of average employees. There was effectively only one Steve Jobs until Tim Cook proved he could be Tim Cook, and as a shareholder I would not want you to try and nickle&dime the guy who has created so much value for shareholders. Yes, the CEO is the chief value creator because ultimately he decides who remains at Apple, he sets the overall strategy and HE has to take full and final responsibility in front of shareholders for all results good or bad. Mr Middle Manager or Mr Programmer is not going to be called in by the board to explain any problems with profits or growth. Mr Programmer is important but there are more people that can do his job as well as him, as there are people who have a proven track record running an Apple or similar. Shareholders that buy Apple stock do so at least in part because Tim Cook is the CEO. Sure I first look at the business fundamentals and the valuation, but Tim Cook's proven track record is a major part. Go watch Buffet interviews on YouTube to hear how highly he rates Tim Cook. I've never heard Warren Argue that Tim is overpaid, and yet Warren is a very large shareholder. It's easy for people with very little stake in Apple to have strong opinions about what the Apple CEO should be paid. If shareholders buy Apple stock in part because Tim Cook is the CEO and not some new unproven person of dubious merit, how much is he worth paying? A lot

WalterBright 5y ago
I hold some Apple stock, and I'm not revolting.
- ejoso 5y ago
  I’m glad you’re not revolting. That sounds like it would be a bummer.
  - WalterBright 5y ago
    I do shower at least once a month.

deleted 5y ago

[deleted]

Decker87 5y ago

So just to get this straight: you argued that Tim Cook only got there via his rich family, even before you knew whether that was true.

josefx 5y ago
I may be a bit jaded, a lot of rich people like to pretend they where poor and that their success is entirely self made. Stories like Theranos reinforce the image that the social circles are mostly static and unchanging no matter what the people involved are up to. I checked a bit late in this case but oce I saw some sparse evidence to the contrary in this case I corrected myself.