There's no question now: Apple is dead
If Tim Cook really wants to tie pay to performance, why doesn't he use unit sales of the next big piece of hardware as the benchmark, not the irrational stock market?
It's official: Apple's (AAPL) Board of Directors and executive team, led by Tim Cook, clearly never had or have completely lost any real respect for Steve Jobs.
Anybody who sees my frequent Twitter exchanges with Jon Fortt of CNBC knows how much I respect the guy. There's no better tech reporter in all of tech. And he's a good guy. I can vouch for this on the basis of our limited public and personal conversations.
That said, he's missing the larger -- and more important -- point on why the company's decision (sec.gov) to tie the size (hence, value) of upper management's stock option packages to S&P 500 performance is so tragic. This is not only a rebuke of Steve Jobs and the Apple way -- the very essence of what made Apple the world's greatest company -- it's a perverse validation of Wall Street and the stock market. As if Wall Street should play any role whatsoever in determining how much anybody -- from the CEO to the cleaning crew -- makes at Apple.
I don't agree that it's in the ballpark. In fact, it's not even in the same league. Do a Google search for "Steve Jobs backdated options" and, after a small bit of memory refreshing, I think you'll agree.
But, we're not playing Pepper here. Fortt still has a point.
There's no question it sounds so great to hear the mantra shouted: Tim Cook wants his pay tied to his performance! Here he is playing the role of shareholder's best friend again.
First, it's an easy move to make when you're already rich beyond comprehension. The most recent take by Cook and his colleagues hits in the multi millions, according to a Securities and Exchange Commission document tied to the options restructuring. Of course, there's nothing wrong with that. It's how these guys get paid. It's perfectly explainable. On the up and up. But, again, you're putting compensation at risk that's little more than icing on an already badass cake.
Second, don't buy the superficiality of the argument that this is good for shareholders because Apple brass now has real incentive to see the stock price rise. Tied to the first point, this is not real, true incentive. This is akin to the author Barbara Ehrenreich seeing how it feels to work minimum wage jobs in "Nickel and Dimed: On (Not) Getting By in America" or an activist "experiencing" homelessness for a few nights.
When you have security (a credit card for emergencies, money in the bank, fortune), you really cannot experience being poor or the type of scared stiff incentive that drives people to snatch victory from the jaws of defeat. It's just not possible. It's not even the same as somebody making $100,000 a year being incentivized up to $150,000 or $200,000. It's all lip service. Something we're seeing more and more of from Apple under Cook's leadership.
It's astonishing that anybody at Apple would go along with the notion of freaking Wall Street dictating how much somebody gets paid. Isn't the going argument among people who request we lay off the Apple bearishness that the market "misprices" the value of AAPL stock? You know ... how can Amazon.com (AMZN) "lose money" or have a P/E of 3,000 and a stock price of $270, while investors "undervalue" AAPL at a P/E of 10?
But, yeah, it's a brilliant and ballsy move by Cook and the Board to, yet again, give the nod to external and irrational forces such as the stock market. These guys are recklessly and multi-handedly desecrating Steve Jobs's legacy (TheStreet). This is just another example of Apple losing its way, operating like every other company.
Come up with something novel. Think different. Apple has stooped to the point where it has to "reward" shareholders with stuff right out of the MBA textbook. Dividends. Buybacks. Zero imagination.
If Tim Cook really wants to tie his pay to performance, why doesn't he use unit sales of Apple's next big piece of hardware as the benchmark, not a market index that's coming off of one of history's biggest bull runs?
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Agree completely. One of life's defining principles is as follows: Everything flows from the head (of business, government, etc.)
It is a sad fact that the head of Apple, Steve Jobs is no longer at the helm and adhering to that principle... Apple will never be the same... ever.
Similarly, I saw the same thing happen at another great Silicon Valley mover and shaker... as I was blessed to work for HP for 20 years. When Bill Hewlett and Dave Packard took their last breath, so did the greatness of HP.
Time to move on...
Apple puts pieces from other companies together, then sells the conglomerate for more than it is worth. Of course it is worth what people are willing to pay for it.
Looks like people are wising up and finding out Apple's competitors are also putting those same pieces from those same companies together to make a similar (same) product. Now who will sell it for the least amount? Apple's mistake was to start issuing Dividends. They will run out of the money they were famously known for.
They are now no better or worse than Samsung or Blackberry, Dell or HP.
"They are us!"
Good concept, bad integration. Profitability is what makes a company successful, not the number of "untis of hardware" sold. CEO's should be compensated on the profitability of the company they steer, not their gross number of widgets sold on the open market. Apple has always made huge profits on the basis that their product is cooler than any of the others. Apple created the demand, and received heavy profits per unti sold (now that is how you make money). As with all things cool, its very difficult to remain cool (look at all the boy bands and teenybopper singers). Apple has been able to define gadget markets and be the leader of (I need this NOW) mentality of the consumer. IPhone, IPad, IPad mini, IPod, etc..
Now, the market has caught up with them in coolness. There are other options that function better, have better attributes, and cost less. Consumers no longer feel the need to overpay for technology that is no longer unique in the market place. There are other tablets that do more and cost less. There are other smart phones that do more and cost less. We know that there are many other laptops that perform better and cost much less, not to mention the old desk top business work horse. There are many companies that invent the sector, but cannot keep the competition from nipping at its heels. Apple needs to re-invent another sector and run with it. However, with so many other tech companies understanding the tech market, they may not be able to be the first and the coolest.
If you think you'll be better paid based on another's performance metric than on one of your own, wouldn't you go for it?
What more can the Timster tell you about his view of AAPL's near future?
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Do it once a year. This allows the best-performing asset classes to take off and run.
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