Thanks for the link. I think the makers of that video don't seem to realise that the wealth that top 1% has is gained by having money to invest and therefore grows exponentially once they have money to burn. They invest and gain more money because they are able to. The poor do not have the means to get there, and should understand that one can 'only' get more rich once all the primary necessities are in place: food, shelter, safety and so on. That's not to say that one cannot get rich while being poor, I mean that Angela Ahrendts gets her RSU bonus based on previous achievements. Whether the amount of RSU is too high is another discussion altogether.
While they narrator makes a good point on showing the difference between perception and reality, they totally missed the point on why things are the way they are. Personal opinion, obviously, but that article/video gets a thumb down from me.
I don't think there's any injustice or brutality in the system of capitalism. It's the way things work. What could be considered injustice is how the rich got rich. Just read that article on Samsung that @SolipsismX@GTR posted; they certainly didn't become rich and successful by doing an honourable job.
What the video illustrates well is 'reality' v what people think 'reality' is, set against what people across the board think 'reality ought to be'. I am not sure it tries to explain how such a state of inequality came to be. In my view, when capitalism as a system governs social policies it becomes unjust and brutal, almost by definition. It is deluded to believe in 'self regulation', in my opinion. If on the other hand, social policies are arrived upon and governed free of market forces, capitalism needn't be problematic.
Not everyone who owns stock paid the latest price so the market caps that some of these companies have doesn't exist in monetary terms. That amount of cash hasn't been exchanged for stock, it's just based on what new investors are willing to pay for their small share. It's the same with things like Bitcoin. Bitcoins were being created years ago on computers and no money was exchanged for them. The value of the total coins only rose to where it is now due to what people were willing to pay to start using them but all that cash doesn't exist.
This is where the finance industry is becoming extremely dangerous because they are creating these huge amounts of wealth that are legally recognised but are only based on perception of worth and there's very little link to anything tangible. Tesla hardly makes any profit at all and yet because new investors are willing to pay over $200 for one share of the company, that makes Elon Musk a billionaire but he doesn't have the billions in cash. He has an asset that currently has that value and that value is so fragile being based solely on perception that it can be wiped out tomorrow if traders decided to.
I'd say this is one of the biggest reasons for wealth inequality because average workers don't have the kind of assets that are valued this way. That is where PhilBoogie's comment comes in about asset growth. The volatility of stock options creates a scenario of very fast growth. Owning stock is the fastest way to become super rich because it's probably the only way you can get rich from someone else's hard work and future promises.
Some might suggest that everyone should own stock then but there's risk and risk needs to be managed. Full time employees don't have the time to manage the risk and don't have the capital to risk anyway. People at the bottom take out loans and mortgages they pay interest on. The people at the top earn interest on the financial assets they own. The interest that the people at the bottom pay contributes to the profits of the companies that the wealthy own stock in.
The whole system is designed to shift wealth from the poor to the wealthy and keep the poor with no upwards mobility. The fictional wealth known as stock options act as a means of leverage.
In cases where the stock option values actually match closely to the company profits, that's at least closer to tangible cash values so the money either goes to the employees, the shareholders or it sits in a financial institution in the form of stock in other companies (again some fictional values) or treasuries. Whatever happens, someone's going to get wealthy from it. They could volunteer to increase the salaries of the people at the bottom but they'd have to justify to shareholders why. The roles at the bottom are deemed replaceable because of the lack of uniqueness in the skills required.
The system is broken by design, there's no coercion possible. There needs to be a fundamental change in how the whole system works. The people at the bottom shouldn't be forced into debt and subsequently have no asset growth. If people are working and contributing, they should have a high rate of asset growth, which is an incentive to work. People who are wealthy should have little to no asset growth and an incentive to spend. People who aren't working or contributing should have no asset growth, which is the disincentive to avoid work. Right now, people who don't work can see that no matter how hard they try, they get nowhere so they may as well sit at home watching TV than stressing at work.
How is a country going to pay for 'everything' then? How will roads and infrastructure remain maintained? Education? Health care?
The solution that some people see is to remove any barriers to wealthy people becoming as wealthy as they choose (income tax would currently be the biggest tax that the wealthy pay - sales tax is paid by customers) where they'd then be free to privatize pretty much all forms of service. When it inevitably leads to a monopoly due to the distribution of large amounts of wealth between so few people, it would cause complete chaos but that's when they would suggest being armed and civilzation as we know it would fall apart. At this point some would listen out for the harbingers of the apocalypse oblivious to the fact they're the ones bringing it about.
One form of taxation I'm interested in is transaction tax. Transaction value is far higher than the amount of assets in circulation. If they have a very low transaction tax, it gets compounded and the people hit worst are people trading most frequently but the values can be so small that you wouldn't really notice it. I'd have to see more data on who it would affect most but it could eliminate all forms of explicit taxation (income tax, vehicle tax, sales tax, property tax, the whole lot) and tax returns. The values would be collected during transactions by financial institutions and used to fund public services.
Phil: any reaction to the Krugman interview over Piketty's book I linked to above?
The thing is we are rapidly moving towards to a society for and by the rich few. Sure, because they can afford it, but we trumpet capitalism, perhaps at our own peril. Unless we have wealth, where we trumpet it because it helps us. The system has now been rigged to benefit the wealthy, making it ever more difficult for the poor to jump up, or even just live a quality life (the latter doe not mean being wealthy). At the same time, the wealthy can get wealthier more easily, and stay that way.
Thanks for the link. I think the makers of that video don't seem to realise that the wealth that top 1% has is gained by having money to invest and therefore grows exponentially once they have money to burn. They invest and gain more money because they are able to. The poor do not have the means to get there, and should understand that one can 'only' get more rich once all the primary necessities are in place: food, shelter, safety and so on. That's not to say that one cannot get rich while being poor, I mean that Angela Ahrendts gets her RSU bonus based on previous achievements. Whether the amount of RSU is too high is another discussion altogether.
While they narrator makes a good point on showing the difference between perception and reality, they totally missed the point on why things are the way they are. Personal opinion, obviously, but that article/video gets a thumb down from me.
I don't think there's any injustice or brutality in the system of capitalism. It's the way things work. What could be considered injustice is how the rich got rich. Just read that article on Samsung that [@]SolipsismX[/@] [@]GTR[/@] posted; they certainly didn't become rich and successful by doing an honourable job.
I fear that capitalism is turning into warped form of socialism, and that worries me a lot.
Having some friends and relatives in ex-socialist/communist countries, I have observed a common case of people on the top with huge salaries and very little real responsibility. Often incompetent, and always part of some sort of privileged circle, usually with (but not exclusively) political background.
I'm seeing a lot of similarities with recent CEO trends and disasters in western world. People like Leo Apotheker, taking over large companies for obscene amount of money, screwing up royally and bailing out with even more obscene golden parachute... just to resurrect in another high-profile job. Ex-politicians suddenly re-spawning in directors boards of successful companies, working in their own interest, or interest of some shady circle who supports them, instead of interest of company and consumers.
VIPs should have solid but unremarkable salary basis, everything else should come based on performance and results. Period. Give them opportunity to make hundreds of millions, but only if they make much more for the company; basically, a commission system. And no golden parachutes. If you screw up, you are out. You should give money back, not leave with another couple of dozen millions just because you were not let to enjoy your privileged contract all the way.
But as it is, they have warped the system to reduce their personal responsibility, and enable them to help their buddies from the circle, knowing that tomorrow their buddies will help them; hand's washing hand, and there seems to be nothing to chop hand off on occasion, if required.
The money that executives are paid is a complete f*&^)*ing disgrace — a worldwide, disgusting, disgrace. Pay them for results, not to have their over-entitled asses sit in a damned chair.
Phil: any reaction to the Krugman interview over Piketty's book I linked to above?
Just watched it. An eye-opener, for sure. I thought I had 'reasonable knowledge' on the American economy, but there are many things I didn't know. In order to give a worthy response I really should be reading up on what has changed, read more in depth stories rather than my newspaper articles on the front page of the international economy section.
Thanks for the link! (also like that Vimeo is getting/publishing more and more of these kinds of videos)
I fear that capitalism is turning into warped form of socialism, and that worries me a lot.
Having some friends and relatives in ex-socialist/communist countries, I have observed a common case of people on the top with huge salaries and very little real responsibility. Often incompetent, and always part of some sort of privileged circle, usually with (but not exclusively) political background.
I'm seeing a lot of similarities with recent CEO trends and disasters in western world. People like Leo Apotheker, taking over large companies for obscene amount of money, screwing up royally and bailing out with even more obscene golden parachute... just to resurrect in another high-profile job. Ex-politicians suddenly re-spawning in directors boards of successful companies, working in their own interest, or interest of some shady circle who supports them, instead of interest of company and consumers.
VIPs should have solid but unremarkable salary basis, everything else should come based on performance and results. Period. Give them opportunity to make hundreds of millions, but only if they make much more for the company; basically, a commission system. And no golden parachutes. If you screw up, you are out. You should give money back, not leave with another couple of dozen millions just because you were not let to enjoy your privileged contract all the way.
But as it is, they have warped the system to reduce their personal responsibility, and enable them to help their buddies from the circle, knowing that tomorrow their buddies will help them; hand's washing hand, and there seems to be nothing to chop hand off on occasion, if required.
Agreed, especially on the bolded parts. I don't know much about Leo Apotheker, but he's certainly smart (Fluent in five languages: Dutch, English, French, German and Hebrew >) and climbed up the ladder at SAP but Meg Whitman had to undo his wrong-doing at HP.
Over here in The Netherlands our government has put a maximum salary in place for high level politicians. And they'e working on doing the same in the public sector, which is happening in several other European countries as well.
The money that executives are paid is a complete f*&^)*ing disgrace — a worldwide, disgusting, disgrace. Pay them for results, not to have their over-entitled asses sit in a damned chair.
If you think all these high paying executives are merely 'sitting in a chair' you may not have had the experience in doing business with an executive...they all have great responsibilities, especially public companies.
She tripled the value of Burberry in 7 years. Could you or i have done that? Probably not. So, if anyone is worth that much, she is.
How do you know that she tripled Burberry's value though? All you can say for sure is that Burberry's value tripled while she was CEO, which has an entirely different meaning. It's just how we simplify things like saying an army general or country president won a particular war. Without the people at the front line delivering the work then they couldn't deliver any results. This happened with Apple too where Steve Jobs would ask the marketing teams and product teams to bring ideas and product concepts to him but to people on the outside, it was all Steve. You'd never know at the time that it was Phil Schiller that came up with the iconic click-wheel on the iPod or some random guy looking for a job that came up with the Dock magnification.
Some people have the idea that great leaders can be put into any circumstances and succeed. To an extent this is true but take the example of Pixar. It wasn't Steve Jobs making the movies or the software required to produce the movies, it was the artists and technicians at Pixar. Steve was mostly keeping the funding coming in and doing the business deals. The buyout from Disney is what gave Steve most of his billions. Was Steve more important to Pixar than Ed Catmull, Larry Gritz, John Lasseter, Alvy Ray Smith, Jim Blinn? Look at the following videos where Steve gets an occasional mention but isn't doing any of the pioneering graphics work:
Without the leadership and investment, the business might never have happened but similarly Steve Jobs could have invested in and managed another group of people and the business also would never have happened. It's not right to say that one individual injecting cash is worth 1000x more than one of the pioneers delivering the products. It just happens to be that's how the reward system has evolved.
Often, people at the bottom of a company hierarchy can be replaced easily so they are in no way equal to the people at the top but sometimes the people at the top do a really bad job too:
The executive class has moved from the greed stage to the gluttony stage.
Even if you think that her stock options are appropriate you can't defend the crazy front loadibg of her options...seriously she can't be encouraged to complete just five years of employment to get the bulk of the options!
She was already making millions per year. Perhaps she wants this job as an opportunity for personal accomplishment or to make a difference in the world, not necessarily for the money.
Probably a bit of everything, plus she was headhunted.
There is a humongous pool of individuals that are highly qualified and can perform the same responsibilities and duties for a lot less money. In fact, I would argue that many work harder, have higher responsibilities, and could be fired at any time for being in the wrong product line (due to some VP shortsightedness) than most of these VPs. It is sickening to see so much money being handed about with little vesting time. Most typical company workers get RSU that start to vest at 5 years, not in 1 month.
Sad to see that people that risk their lives everyday like police, armed forces, firemen, etc. get paid such paltry salaries for risking their lives. Then, see some senior VP get paid over 1000 times more when their lives are not even at risk. Those that risk their lives should be worth a lot more!
’Twas ever thus, at least, unless you are a mercenary. But imagine if the US army got paid the same. Your taxes would need to go up somewhat.
In corporations, you are paid according to your expertise and the relative value you bring to the company. This woman came from a similar background when she was with Burberry, and Apple chose her as Senior Vice President over Apple's Retail and Online Stores, a multi-billion dollar operation.
It is easy to say that anyone else is qualified to do the job, and that they are overpaid. Apple is a multi-billion dollar corporation, and their retail operations and online stores are critical to the company. Apple is not just going to entrust such responsibility to just anyone. To devalue this woman's experience and expertise relative to the overall value she brings to the company is arrogant - when you are not qualified yourself to walk in her shoes.
She was already successful at Burberry, which is why she was chosen.
As for the public servants that you speak about, they are not paid by corporations, but by taxpayers. If they are worth more than they are paid, you are welcome to directly contribute to their salary voluntarily. There is nothing stopping you. This isn't socialism, but capitalism - a free market by which the public voluntarily pays the corporations for the products and services it provides - which in turns, pays its employees for the value they bring to the company.
If you want the public service employees to make more money, then find a way for them to be directly funded by the very public that they serve, rather than through government organizations who takes the public's money and decides how to spend it. If you see a problem, offer a solution to the problem, and then do it. Otherwise, your complaint is nothing but noise without taking responsibility to do anything about it.
Of course lots of public service employees deserve to be paid more, but we can't afford to. Capitalism isn't the answer, nor socialism.
Just watched it. An eye-opener, for sure. I thought I had 'reasonable knowledge' on the American economy, but there are many things I didn't know. In order to give a worthy response I really should be reading up on what has changed, read more in depth stories rather than my newspaper articles on the front page of the international economy section.
Thanks for the link! (also like that Vimeo is getting/publishing more and more of these kinds of videos)
Agreed, especially on the bolded parts. I don't know much about Leo Apotheker, but he's certainly smart (Fluent in five languages: Dutch, English, French, German and Hebrew >) and climbed up the ladder at SAP but Meg Whitman had to undo his wrong-doing at HP.
Over here in The Netherlands our government has put a maximum salary in place for high level politicians. And they'e working on doing the same in the public sector, which is happening in several other European countries as well.
If you think all these high paying executives are merely 'sitting in a chair' you may not have had the experience in doing business with an executive...they all have great responsibilities, especially public companies.
Look at Thorsten Heins-it's highly contestable whether he was good for Blackberry, and yet he had a huge golden handshake.
How do you know that she tripled Burberry's value though? All you can say for sure is that Burberry's value tripled while she was CEO, which has an entirely different meaning. It's just how we simplify things like saying an army general or country president won a particular war. Without the people at the front line delivering the work then they couldn't deliver any results. This happened with Apple too where Steve Jobs would ask the marketing teams and product teams to bring ideas and product concepts to him but to people on the outside, it was all Steve. You'd never know at the time that it was Phil Schiller that came up with the iconic click-wheel on the iPod or some random guy looking for a job that came up with the Dock magnification.
Some people have the idea that great leaders can be put into any circumstances and succeed. To an extent this is true but take the example of Pixar. It wasn't Steve Jobs making the movies or the software required to produce the movies, it was the artists and technicians at Pixar. Steve was mostly keeping the funding coming in and doing the business deals. The buyout from Disney is what gave Steve most of his billions. Was Steve more important to Pixar than Ed Catmull, Larry Gritz, John Lasseter, Alvy Ray Smith, Jim Blinn? Look at the following videos where Steve gets an occasional mention but isn't doing any of the pioneering graphics work:
Without the leadership and investment, the business might never have happened but similarly Steve Jobs could have invested in and managed another group of people and the business also would never have happened. It's not right to say that one individual injecting cash is worth 1000x more than one of the pioneers delivering the products. It just happens to be that's how the reward system has evolved.
Often, people at the bottom of a company hierarchy can be replaced easily so they are in no way equal to the people at the top but sometimes the people at the top do a really bad job too:
The difference is that people at the top doing a bad job still make millions.
It's hard to define worth. AA was, I believe, the impetus for turning Burberry around and was therefore the central stimulus for their success, but as you say, that doesn't mean she did it single-handed, any more than Steve Jobs designed the iPhone single-handed. But presumably Burberry felt she was worth whatever they paid her.
She tripled the value of Burberry in 7 years. Could you or i have done that? Probably not. So, if anyone is worth that much, she is.
Whether you or I could do it is irrelevant when the context is "Is Ahrendts worth 68 million in stock options" . The more pertinent question is how many people could could do the job overall. I have my doubts that Ahrendts is in such an small and Elite group of retail Execs that it would be prohibitively difficult to find a suitable replacement.
Apple tends to make executives look better than they really are as witnessed by the abject failure of departing execs in finding success in other companies.
Ron Johnson at JC Penney - colossal failure
Rubinstein at Palm - Failure
I have NO IDEA why John Browett was hired but I do know that Angela is looking good because Tim Cook cannot afford another blunder like the Browett hiring.
Tony Fadell of all people found success by getting Google to overpay for one trick pony company but by and large Apple execs never find success when they leave. Angela will do well but it's really hard to not have success at Apple a company near 40 years of solvency.
Look at Thorsten Heins-it's highly contestable whether he was good for Blackberry, and yet he had a huge golden handshake.
Indeed, $22M seems ridiculous for his short-lived tenure at the company, declining take-over offers and leaving the company worse than it was before his appointment. Maybe he should've stayed as COO but that's difficult to tell, after the fact.
How the mighty have fallen. But who could have been appointed as their new CEO? "Nobody wants to catch a falling knife."
Comments
Thanks for the link. I think the makers of that video don't seem to realise that the wealth that top 1% has is gained by having money to invest and therefore grows exponentially once they have money to burn. They invest and gain more money because they are able to. The poor do not have the means to get there, and should understand that one can 'only' get more rich once all the primary necessities are in place: food, shelter, safety and so on. That's not to say that one cannot get rich while being poor, I mean that Angela Ahrendts gets her RSU bonus based on previous achievements. Whether the amount of RSU is too high is another discussion altogether.
While they narrator makes a good point on showing the difference between perception and reality, they totally missed the point on why things are the way they are. Personal opinion, obviously, but that article/video gets a thumb down from me.
I don't think there's any injustice or brutality in the system of capitalism. It's the way things work. What could be considered injustice is how the rich got rich. Just read that article on Samsung that @SolipsismX @GTR posted; they certainly didn't become rich and successful by doing an honourable job.
What the video illustrates well is 'reality' v what people think 'reality' is, set against what people across the board think 'reality ought to be'. I am not sure it tries to explain how such a state of inequality came to be. In my view, when capitalism as a system governs social policies it becomes unjust and brutal, almost by definition. It is deluded to believe in 'self regulation', in my opinion. If on the other hand, social policies are arrived upon and governed free of market forces, capitalism needn't be problematic.
Yes. She looks hot, so she's worth it.
It's important to consider what form the payment is in. Stock options are taxed and valued differently from cash.
Take CEO Elon Musk, he owns 28% of Tesla stock so when the stock price changes, his determined wealth changes rapidly:
http://business.time.com/2014/02/26/elon-musk-1-1-billion-tesla-tuesday/
As the following example shows, it can decline rapidly too:
http://www.businessweek.com/articles/2013-10-03/eike-batista-how-brazils-richest-man-lost-34-dot-5-billion
Not everyone who owns stock paid the latest price so the market caps that some of these companies have doesn't exist in monetary terms. That amount of cash hasn't been exchanged for stock, it's just based on what new investors are willing to pay for their small share. It's the same with things like Bitcoin. Bitcoins were being created years ago on computers and no money was exchanged for them. The value of the total coins only rose to where it is now due to what people were willing to pay to start using them but all that cash doesn't exist.
This is where the finance industry is becoming extremely dangerous because they are creating these huge amounts of wealth that are legally recognised but are only based on perception of worth and there's very little link to anything tangible. Tesla hardly makes any profit at all and yet because new investors are willing to pay over $200 for one share of the company, that makes Elon Musk a billionaire but he doesn't have the billions in cash. He has an asset that currently has that value and that value is so fragile being based solely on perception that it can be wiped out tomorrow if traders decided to.
I'd say this is one of the biggest reasons for wealth inequality because average workers don't have the kind of assets that are valued this way. That is where PhilBoogie's comment comes in about asset growth. The volatility of stock options creates a scenario of very fast growth. Owning stock is the fastest way to become super rich because it's probably the only way you can get rich from someone else's hard work and future promises.
Some might suggest that everyone should own stock then but there's risk and risk needs to be managed. Full time employees don't have the time to manage the risk and don't have the capital to risk anyway. People at the bottom take out loans and mortgages they pay interest on. The people at the top earn interest on the financial assets they own. The interest that the people at the bottom pay contributes to the profits of the companies that the wealthy own stock in.
The whole system is designed to shift wealth from the poor to the wealthy and keep the poor with no upwards mobility. The fictional wealth known as stock options act as a means of leverage.
In cases where the stock option values actually match closely to the company profits, that's at least closer to tangible cash values so the money either goes to the employees, the shareholders or it sits in a financial institution in the form of stock in other companies (again some fictional values) or treasuries. Whatever happens, someone's going to get wealthy from it. They could volunteer to increase the salaries of the people at the bottom but they'd have to justify to shareholders why. The roles at the bottom are deemed replaceable because of the lack of uniqueness in the skills required.
The system is broken by design, there's no coercion possible. There needs to be a fundamental change in how the whole system works. The people at the bottom shouldn't be forced into debt and subsequently have no asset growth. If people are working and contributing, they should have a high rate of asset growth, which is an incentive to work. People who are wealthy should have little to no asset growth and an incentive to spend. People who aren't working or contributing should have no asset growth, which is the disincentive to avoid work. Right now, people who don't work can see that no matter how hard they try, they get nowhere so they may as well sit at home watching TV than stressing at work.
The solution that some people see is to remove any barriers to wealthy people becoming as wealthy as they choose (income tax would currently be the biggest tax that the wealthy pay - sales tax is paid by customers) where they'd then be free to privatize pretty much all forms of service. When it inevitably leads to a monopoly due to the distribution of large amounts of wealth between so few people, it would cause complete chaos but that's when they would suggest being armed and civilzation as we know it would fall apart. At this point some would listen out for the harbingers of the apocalypse oblivious to the fact they're the ones bringing it about.
One form of taxation I'm interested in is transaction tax. Transaction value is far higher than the amount of assets in circulation. If they have a very low transaction tax, it gets compounded and the people hit worst are people trading most frequently but the values can be so small that you wouldn't really notice it. I'd have to see more data on who it would affect most but it could eliminate all forms of explicit taxation (income tax, vehicle tax, sales tax, property tax, the whole lot) and tax returns. The values would be collected during transactions by financial institutions and used to fund public services.
I fear that capitalism is turning into warped form of socialism, and that worries me a lot.
Having some friends and relatives in ex-socialist/communist countries, I have observed a common case of people on the top with huge salaries and very little real responsibility. Often incompetent, and always part of some sort of privileged circle, usually with (but not exclusively) political background.
I'm seeing a lot of similarities with recent CEO trends and disasters in western world. People like Leo Apotheker, taking over large companies for obscene amount of money, screwing up royally and bailing out with even more obscene golden parachute... just to resurrect in another high-profile job. Ex-politicians suddenly re-spawning in directors boards of successful companies, working in their own interest, or interest of some shady circle who supports them, instead of interest of company and consumers.
VIPs should have solid but unremarkable salary basis, everything else should come based on performance and results. Period. Give them opportunity to make hundreds of millions, but only if they make much more for the company; basically, a commission system. And no golden parachutes. If you screw up, you are out. You should give money back, not leave with another couple of dozen millions just because you were not let to enjoy your privileged contract all the way.
But as it is, they have warped the system to reduce their personal responsibility, and enable them to help their buddies from the circle, knowing that tomorrow their buddies will help them; hand's washing hand, and there seems to be nothing to chop hand off on occasion, if required.
She tripled the value of Burberry in 7 years. Could you or i have done that? Probably not. So, if anyone is worth that much, she is.
The money that executives are paid is a complete f*&^)*ing disgrace — a worldwide, disgusting, disgrace. Pay them for results, not to have their over-entitled asses sit in a damned chair.
Just watched it. An eye-opener, for sure. I thought I had 'reasonable knowledge' on the American economy, but there are many things I didn't know. In order to give a worthy response I really should be reading up on what has changed, read more in depth stories rather than my newspaper articles on the front page of the international economy section.
Thanks for the link! (also like that Vimeo is getting/publishing more and more of these kinds of videos)
Agreed, especially on the bolded parts. I don't know much about Leo Apotheker, but he's certainly smart (Fluent in five languages: Dutch, English, French, German and Hebrew >) and climbed up the ladder at SAP but Meg Whitman had to undo his wrong-doing at HP.
Over here in The Netherlands our government has put a maximum salary in place for high level politicians. And they'e working on doing the same in the public sector, which is happening in several other European countries as well.
If you think all these high paying executives are merely 'sitting in a chair' you may not have had the experience in doing business with an executive...they all have great responsibilities, especially public companies.
How do you know that she tripled Burberry's value though? All you can say for sure is that Burberry's value tripled while she was CEO, which has an entirely different meaning. It's just how we simplify things like saying an army general or country president won a particular war. Without the people at the front line delivering the work then they couldn't deliver any results. This happened with Apple too where Steve Jobs would ask the marketing teams and product teams to bring ideas and product concepts to him but to people on the outside, it was all Steve. You'd never know at the time that it was Phil Schiller that came up with the iconic click-wheel on the iPod or some random guy looking for a job that came up with the Dock magnification.
Some people have the idea that great leaders can be put into any circumstances and succeed. To an extent this is true but take the example of Pixar. It wasn't Steve Jobs making the movies or the software required to produce the movies, it was the artists and technicians at Pixar. Steve was mostly keeping the funding coming in and doing the business deals. The buyout from Disney is what gave Steve most of his billions. Was Steve more important to Pixar than Ed Catmull, Larry Gritz, John Lasseter, Alvy Ray Smith, Jim Blinn? Look at the following videos where Steve gets an occasional mention but isn't doing any of the pioneering graphics work:
Without the leadership and investment, the business might never have happened but similarly Steve Jobs could have invested in and managed another group of people and the business also would never have happened. It's not right to say that one individual injecting cash is worth 1000x more than one of the pioneers delivering the products. It just happens to be that's how the reward system has evolved.
Often, people at the bottom of a company hierarchy can be replaced easily so they are in no way equal to the people at the top but sometimes the people at the top do a really bad job too:
http://www.forbes.com/sites/susanadams/2013/04/23/the-ceo-revolving-door-is-speeding-up-study-shows/
The difference is that people at the top doing a bad job still make millions.
Even if you think that her stock options are appropriate you can't defend the crazy front loadibg of her options...seriously she can't be encouraged to complete just five years of employment to get the bulk of the options!
This reflects poorly on APPL.
Does she go by "Angel" instead of "Angela" or was this a typo in two different places by the author of this article?
Both and neither.
Nice first day on the job!
Really, is any one person worth that much?
She is.
If she's not a proper fit and is "shown the door" as was John Browett, will she have to give the money back? </s>
/
/
/
Yep, in dollar bills.
She was already making millions per year. Perhaps she wants this job as an opportunity for personal accomplishment or to make a difference in the world, not necessarily for the money.
Probably a bit of everything, plus she was headhunted.
There is a humongous pool of individuals that are highly qualified and can perform the same responsibilities and duties for a lot less money. In fact, I would argue that many work harder, have higher responsibilities, and could be fired at any time for being in the wrong product line (due to some VP shortsightedness) than most of these VPs. It is sickening to see so much money being handed about with little vesting time. Most typical company workers get RSU that start to vest at 5 years, not in 1 month.
Sad to see that people that risk their lives everyday like police, armed forces, firemen, etc. get paid such paltry salaries for risking their lives. Then, see some senior VP get paid over 1000 times more when their lives are not even at risk. Those that risk their lives should be worth a lot more!
’Twas ever thus, at least, unless you are a mercenary. But imagine if the US army got paid the same. Your taxes would need to go up somewhat.
In corporations, you are paid according to your expertise and the relative value you bring to the company. This woman came from a similar background when she was with Burberry, and Apple chose her as Senior Vice President over Apple's Retail and Online Stores, a multi-billion dollar operation.
It is easy to say that anyone else is qualified to do the job, and that they are overpaid. Apple is a multi-billion dollar corporation, and their retail operations and online stores are critical to the company. Apple is not just going to entrust such responsibility to just anyone. To devalue this woman's experience and expertise relative to the overall value she brings to the company is arrogant - when you are not qualified yourself to walk in her shoes.
She was already successful at Burberry, which is why she was chosen.
As for the public servants that you speak about, they are not paid by corporations, but by taxpayers. If they are worth more than they are paid, you are welcome to directly contribute to their salary voluntarily. There is nothing stopping you. This isn't socialism, but capitalism - a free market by which the public voluntarily pays the corporations for the products and services it provides - which in turns, pays its employees for the value they bring to the company.
If you want the public service employees to make more money, then find a way for them to be directly funded by the very public that they serve, rather than through government organizations who takes the public's money and decides how to spend it. If you see a problem, offer a solution to the problem, and then do it. Otherwise, your complaint is nothing but noise without taking responsibility to do anything about it.
Of course lots of public service employees deserve to be paid more, but we can't afford to. Capitalism isn't the answer, nor socialism.
Just watched it. An eye-opener, for sure. I thought I had 'reasonable knowledge' on the American economy, but there are many things I didn't know. In order to give a worthy response I really should be reading up on what has changed, read more in depth stories rather than my newspaper articles on the front page of the international economy section.
Thanks for the link! (also like that Vimeo is getting/publishing more and more of these kinds of videos)
Agreed, especially on the bolded parts. I don't know much about Leo Apotheker, but he's certainly smart (Fluent in five languages: Dutch, English, French, German and Hebrew >) and climbed up the ladder at SAP but Meg Whitman had to undo his wrong-doing at HP.
Over here in The Netherlands our government has put a maximum salary in place for high level politicians. And they'e working on doing the same in the public sector, which is happening in several other European countries as well.
If you think all these high paying executives are merely 'sitting in a chair' you may not have had the experience in doing business with an executive...they all have great responsibilities, especially public companies.
Look at Thorsten Heins-it's highly contestable whether he was good for Blackberry, and yet he had a huge golden handshake.
How do you know that she tripled Burberry's value though? All you can say for sure is that Burberry's value tripled while she was CEO, which has an entirely different meaning. It's just how we simplify things like saying an army general or country president won a particular war. Without the people at the front line delivering the work then they couldn't deliver any results. This happened with Apple too where Steve Jobs would ask the marketing teams and product teams to bring ideas and product concepts to him but to people on the outside, it was all Steve. You'd never know at the time that it was Phil Schiller that came up with the iconic click-wheel on the iPod or some random guy looking for a job that came up with the Dock magnification.
Some people have the idea that great leaders can be put into any circumstances and succeed. To an extent this is true but take the example of Pixar. It wasn't Steve Jobs making the movies or the software required to produce the movies, it was the artists and technicians at Pixar. Steve was mostly keeping the funding coming in and doing the business deals. The buyout from Disney is what gave Steve most of his billions. Was Steve more important to Pixar than Ed Catmull, Larry Gritz, John Lasseter, Alvy Ray Smith, Jim Blinn? Look at the following videos where Steve gets an occasional mention but isn't doing any of the pioneering graphics work:
Without the leadership and investment, the business might never have happened but similarly Steve Jobs could have invested in and managed another group of people and the business also would never have happened. It's not right to say that one individual injecting cash is worth 1000x more than one of the pioneers delivering the products. It just happens to be that's how the reward system has evolved.
Often, people at the bottom of a company hierarchy can be replaced easily so they are in no way equal to the people at the top but sometimes the people at the top do a really bad job too:
http://www.forbes.com/sites/susanadams/2013/04/23/the-ceo-revolving-door-is-speeding-up-study-shows/
The difference is that people at the top doing a bad job still make millions.
It's hard to define worth. AA was, I believe, the impetus for turning Burberry around and was therefore the central stimulus for their success, but as you say, that doesn't mean she did it single-handed, any more than Steve Jobs designed the iPhone single-handed. But presumably Burberry felt she was worth whatever they paid her.
She tripled the value of Burberry in 7 years. Could you or i have done that? Probably not. So, if anyone is worth that much, she is.
Whether you or I could do it is irrelevant when the context is "Is Ahrendts worth 68 million in stock options" . The more pertinent question is how many people could could do the job overall. I have my doubts that Ahrendts is in such an small and Elite group of retail Execs that it would be prohibitively difficult to find a suitable replacement.
Apple tends to make executives look better than they really are as witnessed by the abject failure of departing execs in finding success in other companies.
Ron Johnson at JC Penney - colossal failure
Rubinstein at Palm - Failure
I have NO IDEA why John Browett was hired but I do know that Angela is looking good because Tim Cook cannot afford another blunder like the Browett hiring.
Tony Fadell of all people found success by getting Google to overpay for one trick pony company but by and large Apple execs never find success when they leave. Angela will do well but it's really hard to not have success at Apple a company near 40 years of solvency.
Indeed, $22M seems ridiculous for his short-lived tenure at the company, declining take-over offers and leaving the company worse than it was before his appointment. Maybe he should've stayed as COO but that's difficult to tell, after the fact.
How the mighty have fallen. But who could have been appointed as their new CEO? "Nobody wants to catch a falling knife."