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Anorak | Tim Cook and Apple beat the principal-agent problem

Tim Cook and Apple beat the principal-agent problem

by | 30th, August 2017

Apple shares are soaring. The iPhone remains the best and most desirable phone on the market. And with success comes money.

Tim Cook, the chief executive of Apple, has collected $89.6m as part of a 10-year deal that he signed as an incentive to keep the iPhone maker at the forefront of the technology industry after he took over the reins in 2011 from company co-founder Steve Jobs.

Nice one:

The stock package awarded to Cook in 2011 was originally valued at $376m, but is now worth much more because Apple shares have increased by six-fold since he signed the deal.

Apple Insider has more:

If Apple’s performance fell in the middle third of the S&P 500, Cook’s RSU award would have been reduced by half. Cook would have collected nothing if Apple stock finished in the bottom-third.

Apple and Cook are bound.

The principal–agent problem, in political science and economics, (also known as agency dilemma or the agency problem) occurs when one person or entity (the “agent”) is able to make decisions on behalf of, or that impact, another person or entity: the “principal”. This dilemma exists in circumstances where agents are motivated to act in their own best interests, which are contrary to those of their principals, and is an example of moral hazard.

Meanwhile, over at the Guardian, which repeats the story of Cook’s earnings from a newswire feed without mention of the penalties Cook faced for missing targets:

The Guardian has confirmed losses of £69m for the last financial year but said it was making significant progress in its membership scheme, with more than 50,000 people paying to sign up.

At least the newspaper now is trying to produce a viable business, asking readers to donate (no, not to pay, as the Times does):

The new editor of The Guardian is to be paid tens of thousands less than her male predecessor, according to figures published by the newspaper group.

Katharine Viner received a salary of £340,000 for 2014-15, putting her basic earnings well behind the £395,000 handed to Alan Rusbridger, whom she replaced last month as editor-in-chief of the paper.

Taking into account Mr Rusbridger’s other payouts from the group, where he was editor for two decades, the former newspaper boss took home £492,000 over the past year, £152,000 more than his successor.

And for his last seasons in charge:

The revelation of the pay gap came as Guardian News and Media, the publisher of The Guardian and The Observer, reported an underlying loss of £19.1 million for its latest financial year, a slight improvement on the £19.4 million it lost the previous year.

Performance-related pay can be perilous.



Posted: 30th, August 2017 | In: Broadsheets, Money, Technology Comment | Follow the Comments on our RSS feed: RSS 2.0 | TrackBack | Permalink