Disney heir on CEO's $66M pay: 'No one on the freaking planet is worth that'(theguardian.com)
theguardian.com
Disney heir on CEO's $66M pay: 'No one on the freaking planet is worth that'
https://www.theguardian.com/us-news/2019/apr/26/abigail-disney-bob-iger-amazon-jeff-bezos
98 comments
What people forget in the debate over public company 'CEOs' is that, when the price of disney shares goes up from $24 to $135, that is millions upon millions of peoples retirements that are that much more secure. So, I mean, would you pay $66 million to someone for a better retirement for others?
Now, I don't know the answer to this question, but this way of looking at the stock price of public companies is often lost on people of all political persuasions.
Another thing to keep in mind is that, Iger 'only' made $3million last year. Most of the money reported as 'income' is actually stock grants. $66mln disney stock is not a controlling share, and -- by tying up Iger's wealth in the company -- it aligns his incentives with those of the wealth he has been charged with managing. Nevertheless, Iger couldn't sell this much stock without either being accused of insider trading (since such a large sale would surely manipulate the stock price), and the SECs regulations on insider trading are very strict (they prosecute based on the appearance of insider trading). Thus, given that he can't actually sell the disney stock, it's a real disservice to say he made $Xmillion in disney stock, given that the stock has no immediate cash value to him.
Now, I don't know the answer to this question, but this way of looking at the stock price of public companies is often lost on people of all political persuasions.
Another thing to keep in mind is that, Iger 'only' made $3million last year. Most of the money reported as 'income' is actually stock grants. $66mln disney stock is not a controlling share, and -- by tying up Iger's wealth in the company -- it aligns his incentives with those of the wealth he has been charged with managing. Nevertheless, Iger couldn't sell this much stock without either being accused of insider trading (since such a large sale would surely manipulate the stock price), and the SECs regulations on insider trading are very strict (they prosecute based on the appearance of insider trading). Thus, given that he can't actually sell the disney stock, it's a real disservice to say he made $Xmillion in disney stock, given that the stock has no immediate cash value to him.
It feels to me that just because you’re the CEO doesn’t mean you’re singlehandedly responsible for all that wealth being created. A whole bunch of employees worked really hard to raise that stock price, and they’re not even being paid a living wage. Some of them can’t afford an apartment and live in their cars.
I don’t believe the CEO caused all of that rise in the stock, and the issue is whether one person should even be in a position to benefit that much while others get a meager salary. Why does the CEO get so many thousands of shares of Disney stock rather than a large portion of that package going to the many thousands of workers that also helped the company grow in value? Just as you say it makes sense to align the CEOs interests, the same is true for every worker at the company. And one very committed CEO is great, but thousands of appreciated workers who can afford to live would be great for the company too.
I don’t believe the CEO caused all of that rise in the stock, and the issue is whether one person should even be in a position to benefit that much while others get a meager salary. Why does the CEO get so many thousands of shares of Disney stock rather than a large portion of that package going to the many thousands of workers that also helped the company grow in value? Just as you say it makes sense to align the CEOs interests, the same is true for every worker at the company. And one very committed CEO is great, but thousands of appreciated workers who can afford to live would be great for the company too.
Since Iger took over as CEO in 2005, Disney has outpaced the growth of the S&P 500 by 6x (not adjusting for dividends). In aggregate, this higher growth rate is responsible for >$150B of market cap.
It certainly wasn't just Iger's decisions that led to this growth, but it isn't much of a stretch for investors to believe his decisions were responsible for at least a small portion of that. Iger's $60M equity grant dilutes shareholders by roughly 0.02%. If the only thing Iger did was make decisions that resulted in Disney being 0.03% more valuable than they otherwise would've been, then Disney investors got a great deal.
The existence of $12/hr jobs at Disney is a totally legitimate concern, but I believe that's a separate issue.
It certainly wasn't just Iger's decisions that led to this growth, but it isn't much of a stretch for investors to believe his decisions were responsible for at least a small portion of that. Iger's $60M equity grant dilutes shareholders by roughly 0.02%. If the only thing Iger did was make decisions that resulted in Disney being 0.03% more valuable than they otherwise would've been, then Disney investors got a great deal.
The existence of $12/hr jobs at Disney is a totally legitimate concern, but I believe that's a separate issue.
I understand that he contributed to a portion of the $150B growth, but that’s true of every other employee too. Literally every employee works to create that growth. Why is the CEO’s high compensation so obviously justified but the thousands of underpaid workers are viewed as “a separate issue?”
Leverage. The CEO has control over more resources than a front line employee, so their decisions have more weight behind them. Front line employee makes a slightly less optimal decision while performing their job? One customer has a slightly worse experience, skips disneyland next year and Disney loses like $500. Iger buys the wrong company or the right company at the wrong price and Disney loses a billion bucks.
Because of how much impact their decisions have, you really really want to have the best possible person making them. The best person is someone with experience making those decisions, which means they're rich too. So the person you want needs truckloads of money waved at them to be motivated to do the job, and you're quite willing to pay the truckloads to get the best, therefore the compensation ends up being truckloads.
Because of how much impact their decisions have, you really really want to have the best possible person making them. The best person is someone with experience making those decisions, which means they're rich too. So the person you want needs truckloads of money waved at them to be motivated to do the job, and you're quite willing to pay the truckloads to get the best, therefore the compensation ends up being truckloads.
Because they do CEO work.
Look at any CEO who is doing a good job and you will see insane people who are getting low amounts of sleep, focused solely on the company growth to the exclusion of family time, and actually doing work. The work is comprised of tons of knowledge and skill sets.
Let’s take Elon Musk for example; disregarding whether the the company is well run or not. If you look at his work schedule, he is saying things like sleeping at the Tesla factory, working longer shifts, handling regulatory and politician issues, etc. The skill set required and time commitment is something that most people shy away from. Look at the horrified responses to Ma’s work dedication missives and you are on target where the normal person holds up. The insanes go to the political meeting on Capitol Hill, hire and fire subordinates, identify the direction of the company, and then execute on those decisions.
The skill set for the underpaid workers is easy to develop and put together. The dynamic life of a CEO is an item that is difficult as it operates in a dynamic environment that constantly changes and requires time and money investments that mean the employees who report to you may not have Christmas presents for their kids.
Look at any CEO who is doing a good job and you will see insane people who are getting low amounts of sleep, focused solely on the company growth to the exclusion of family time, and actually doing work. The work is comprised of tons of knowledge and skill sets.
Let’s take Elon Musk for example; disregarding whether the the company is well run or not. If you look at his work schedule, he is saying things like sleeping at the Tesla factory, working longer shifts, handling regulatory and politician issues, etc. The skill set required and time commitment is something that most people shy away from. Look at the horrified responses to Ma’s work dedication missives and you are on target where the normal person holds up. The insanes go to the political meeting on Capitol Hill, hire and fire subordinates, identify the direction of the company, and then execute on those decisions.
The skill set for the underpaid workers is easy to develop and put together. The dynamic life of a CEO is an item that is difficult as it operates in a dynamic environment that constantly changes and requires time and money investments that mean the employees who report to you may not have Christmas presents for their kids.
This honestly sounds like hero worship. The hard working style you describe is common with low paid workers too - very low paid workers still work super hard for long hours.
I agree the skill is unique but I don’t see how this work is “worth” many thousands of times more than other hard workers.
I agree the skill is unique but I don’t see how this work is “worth” many thousands of times more than other hard workers.
> Let’s take Elon Musk for example; disregarding whether the the company is well run or not.
If you have to give this caveat, maybe you're on the wrong path to how to evaluate a CEO's worth?
> that mean the employees who report to you may not have Christmas presents for their kids.
Yes, and when you find new and inventive ways to drive down wages of your employees, that's kind of the point of this conversation, isn't it?
If you have to give this caveat, maybe you're on the wrong path to how to evaluate a CEO's worth?
> that mean the employees who report to you may not have Christmas presents for their kids.
Yes, and when you find new and inventive ways to drive down wages of your employees, that's kind of the point of this conversation, isn't it?
> A whole bunch of employees worked really hard to raise that stock price, and they’re not even being paid a living wage. Some of them can’t afford an apartment and live in their cars.
But the CEO was only paid $3million in cash, which is a different order of magnitude in wage multiplier when compared with the lowest employee. I'm unsure what the stock distribution program that disney may or may not have to employees. I actually have no doubt that disney shortchanges their lowest level employees.
But, that is not the question at hand. The company is being asked to provide equivalent wages. To do that, the lowest level employees would get paid cash + stock. That would allow us to make a fairer comparison, but it would not look like what the article wants.
> Why does the CEO get so many thousands of shares of Disney stock rather than a large portion of that package going to the many thousands of workers that also helped the company grow in value?
Morally, I don't disagree with you, but this is certainly not what people mean when they make these wage comparisons. Can you imagine if an employee got minimum wage + hundreds of stock? Most people would think that is the company short changing the employee.
> I don’t believe the CEO caused all of that rise in the stock, and the issue is whether one person should even be in a position to benefit that much while others get a meager salary.
The shareholders of disney think so. Perhaps he did not. I don't know. They are free to fire him if they don't like him.
But the CEO was only paid $3million in cash, which is a different order of magnitude in wage multiplier when compared with the lowest employee. I'm unsure what the stock distribution program that disney may or may not have to employees. I actually have no doubt that disney shortchanges their lowest level employees.
But, that is not the question at hand. The company is being asked to provide equivalent wages. To do that, the lowest level employees would get paid cash + stock. That would allow us to make a fairer comparison, but it would not look like what the article wants.
> Why does the CEO get so many thousands of shares of Disney stock rather than a large portion of that package going to the many thousands of workers that also helped the company grow in value?
Morally, I don't disagree with you, but this is certainly not what people mean when they make these wage comparisons. Can you imagine if an employee got minimum wage + hundreds of stock? Most people would think that is the company short changing the employee.
> I don’t believe the CEO caused all of that rise in the stock, and the issue is whether one person should even be in a position to benefit that much while others get a meager salary.
The shareholders of disney think so. Perhaps he did not. I don't know. They are free to fire him if they don't like him.
As an investor, you'll want a business' value to improve in the future. Thus, you'll want to take actions in the present that maximize the chances and magnitude of success. It is generally not the case that simply rewarding everyone in perfect proportion to their contribution (an impossible goal to begin with) is the best way to improve future outcomes.
One of the biggest confounding factors is the external market. The price of something/someone isn't determine solely by their value, but also by their rarity in the market. Water is essential to life, but you won't pay $infinity for it, because someone else will offer it for cheaper. Whereas a golden nugget may be close to useless in your eyes, but you still can't get one for cheap, because someone else who values it is willing to pay more. That's the market at work.
Analogously, many rank-and-file employees (us programmers included) are easily replaceable. We've developed a well-defined set of skills that slot perfectly into some box that was defined by business owners, so of course many others have squished themselves to fit into the same shape. They're our competition. So yeah, perhaps we contribute meaningful value to our companies, great. But why should they pay us $X if someone else will come along and do the exact same job providing the exact same value for $X-1? Whereas many stellar CEO candidates highly sought after and will have many competing offers and opportunities, driving up their price. If you were easily willing to hire your perfect CEO candidate for $Y, will you also hire her for $Y + $1? What about $Y + $100K? What about $Y + $10MM? Obviously there's a cutoff, yes, but obviously it's significantly higher than $Y if you really value this person and can't easily find an equivalent replacement.
Okay, what about rewarding employees en masse? If you pay _all_ of your developers a higher salary, won't that attract a higher tier of developers than your competition is hiring? Probably. A lot of companies do exactly that. But it's not universally true. It depends on your industry, your competition, the role, etc. For example, due to diminishing returns, your business might not _need_ the highest tier employees at certain roles to have a significant impact. Or there might be such a massive surplus of people to fill that role that it doesn't matter what you pay, you'll still get good people.
Etc.
My personal takeaway from all of this is that, as an employee, you should think of yourself as a business. That means you have to consider your competition (other ppl who have your skillset) as well as your customers (the businesses that pay you for your services). More specifically, you need to figure out how to differentiate yourself from the competition so your price isn't easily driven down. At the same time, you should work to maximize the value you provide to your employer's bottom line, so they have a stronger reason to pay you more. And of course you'll need to be able to do so in a measurable way if you want them to believe you. This last part is why salespeople can easily charge commission, but programmer #5532 working on Tiny Part of Major System cannot.
On a broader scale, I personally believe that it's society's responsibility to create a safety net that prevents people from going hungry or living on the streets. If you're not particularly skilled at, interested in, or capable of playing the capitalism game, it shouldn't mean that you aren't guaranteed basic human rights and dignity. Let the people who want to run fast do so, and let everyone else live happy lives regardless.
One of the biggest confounding factors is the external market. The price of something/someone isn't determine solely by their value, but also by their rarity in the market. Water is essential to life, but you won't pay $infinity for it, because someone else will offer it for cheaper. Whereas a golden nugget may be close to useless in your eyes, but you still can't get one for cheap, because someone else who values it is willing to pay more. That's the market at work.
Analogously, many rank-and-file employees (us programmers included) are easily replaceable. We've developed a well-defined set of skills that slot perfectly into some box that was defined by business owners, so of course many others have squished themselves to fit into the same shape. They're our competition. So yeah, perhaps we contribute meaningful value to our companies, great. But why should they pay us $X if someone else will come along and do the exact same job providing the exact same value for $X-1? Whereas many stellar CEO candidates highly sought after and will have many competing offers and opportunities, driving up their price. If you were easily willing to hire your perfect CEO candidate for $Y, will you also hire her for $Y + $1? What about $Y + $100K? What about $Y + $10MM? Obviously there's a cutoff, yes, but obviously it's significantly higher than $Y if you really value this person and can't easily find an equivalent replacement.
Okay, what about rewarding employees en masse? If you pay _all_ of your developers a higher salary, won't that attract a higher tier of developers than your competition is hiring? Probably. A lot of companies do exactly that. But it's not universally true. It depends on your industry, your competition, the role, etc. For example, due to diminishing returns, your business might not _need_ the highest tier employees at certain roles to have a significant impact. Or there might be such a massive surplus of people to fill that role that it doesn't matter what you pay, you'll still get good people.
Etc.
My personal takeaway from all of this is that, as an employee, you should think of yourself as a business. That means you have to consider your competition (other ppl who have your skillset) as well as your customers (the businesses that pay you for your services). More specifically, you need to figure out how to differentiate yourself from the competition so your price isn't easily driven down. At the same time, you should work to maximize the value you provide to your employer's bottom line, so they have a stronger reason to pay you more. And of course you'll need to be able to do so in a measurable way if you want them to believe you. This last part is why salespeople can easily charge commission, but programmer #5532 working on Tiny Part of Major System cannot.
On a broader scale, I personally believe that it's society's responsibility to create a safety net that prevents people from going hungry or living on the streets. If you're not particularly skilled at, interested in, or capable of playing the capitalism game, it shouldn't mean that you aren't guaranteed basic human rights and dignity. Let the people who want to run fast do so, and let everyone else live happy lives regardless.
Why is any success that company experiences attributed to the CEO's actions? Warren Buffett said that when a business known for difficulty encounters a manager known for brilliance, it's the reputation of the business that remains. We saw this when an ex-Apple retailer tried to revive JC Penney, and when Marissa Mayer was at the helm of Yahoo. These companies died in spite of their management, how do we know that it is not the same for when they succeed?
And yet, Berkshire Hathaway, a textile manufacturer, was able to become a global conglomerate because of the leadership of one man?
The cases you mention show exactly the issue with having a poor CEO. The fact is both of these managers attempted to keep their companies in markets in which they could not make money.
It is useful to think of a CEO not as a day-to-day operations manager, but rather as an institutional investor charged with seeking a larger return on the money invested in their fund by engaging in direct business transactions (rather than purchasing shares for example). In this sense, both JCP and Yahoo failed to manage their money properly.
(BTW, being Marissa Mayer or an 'ex-apple retailer' does not make one a good CEO, as demonstrated by your examples)
The cases you mention show exactly the issue with having a poor CEO. The fact is both of these managers attempted to keep their companies in markets in which they could not make money.
It is useful to think of a CEO not as a day-to-day operations manager, but rather as an institutional investor charged with seeking a larger return on the money invested in their fund by engaging in direct business transactions (rather than purchasing shares for example). In this sense, both JCP and Yahoo failed to manage their money properly.
(BTW, being Marissa Mayer or an 'ex-apple retailer' does not make one a good CEO, as demonstrated by your examples)
I haven’t really followed JCP and Yahoo, but who actually made the decision “to keep their companies in markets in which they could not make money”? Was it the CEO or the board of directors? If it was the board that made the decision, then can we really blame the CEO?
Your assumption is that the management was good despite their failures. It's quite possible that they simply didn't perform well or make great decisions, despite their reputations.
Two points:
A CEO should certainly be well rewarded for a companies growth. Should it be 1500 times the average worker? During the period of the fastest US GDP growth that ratio was at least 10 times less so maybe the ratio could be lower.
CEOs in the US buy back stock a lot these days. That naturally raises the price and doesn’t take a lot of skill or vision. Maybe it is a good idea (it depends) but do you really need to give out lavish compensation when you can manipulate the price?
CEOs in the US buy back stock a lot these days. That naturally raises the price and doesn’t take a lot of skill or vision. Maybe it is a good idea (it depends) but do you really need to give out lavish compensation when you can manipulate the price?
> CEOs in the US buy back stock a lot these days. That naturally raises the price and doesn’t take a lot of skill or vision. Maybe it is a good idea (it depends) but do you really need to give out lavish compensation when you can manipulate the price?
No they don't. Boards buy back stock. CEOs cannot realistically buy back company stock themselves. I mean, Iger only made $3million in cash, so this would be a losing strategy for him.
No they don't. Boards buy back stock. CEOs cannot realistically buy back company stock themselves. I mean, Iger only made $3million in cash, so this would be a losing strategy for him.
A board approves a buyback that the CEO initiates.
A power-hungry CEO would rather hold on to the cash and use it to build a bigger empire. But it’s often in the best interest of shareholders to return cash via a dividend or buyback (buyback is preferred for tax reasons). It’s good that the CEOs interests are aligned with the shareholders here.
Power hungry perhaps. But if his compensation is stock options his goal will be to raise the stock price. A risky wsy is to invest in growth. A safe way is to buy back stock.
It’s good for investors that the company can provide a sure return. If they don’t want to sell in/after a buyback, they can enjoy their more concentrated ownership. The investors can use the cash value of this increased equity to invest in more speculative growth stocks if they want, but they don’t have to.
Jimmy Garoppolo is a mere #90 on the last Forbes Entertainers list, for most earnings for 2018 (Jun 2017 - Jun 2018). He made $36 million. Why should he be allowed to make 900 times what the janitor in the stadium does? He's not even going to be a consequential QB. We should pass a law that says no QB may earn more than $300,000.
Adam Sandler earned $39.5 million to produce some mediocrity. We should obviously make that illegal, right?
So if you run a $223 billion company like Disney, you should earn 1/20th what Adam Sandler does to squeeze out a few bad movies for Netflix.
How about running a trillion dollar company like Microsoft, one of the most important companies in world history and critical to the US economy? Satya Nadella should probably earn less than Simon Cowell, #64 on the Forbes list at $43.5 million in earnings.
Why does Lebron James get to earn $85.5 million? The retort will always be: because James is worth it.
So is an elite CEO running a massive company. The reality is that today these are normal earnings figures for people operating in elite positions where enormous economic value is in play. People in these pay arguments always intentionally devalue the knowledge, experience and skill that is required to operate a company the scale of Disney (that's how they can lay out the premise with a straight face that average worker pay to CEO pay should be low): it's one of the most difficult jobs on earth, and far more difficult and challenging than anything Jimmy Garoppolo will ever do on a football field.
The average Lakers employee isn't worth 1/1000th what Lebron James is to the franchise. The average worker is not worth 1/1000th what Iger is to Disney. That's entirely correct economic math. It's that reality that irrationally upsets almost everyone, because they like to pretend it takes only modest knowledge, experience and skill to operate something like Disney, when in fact being able to do it well is a more rare talent than what the typical elite athlete represents. It's excused in sports only because supposedly that's easier to measure (and yet it still doesn't change the fact that Lebron James earns so much more than the typical worker in the Lakers organization).
https://www.forbes.com/celebrities/list/
Adam Sandler earned $39.5 million to produce some mediocrity. We should obviously make that illegal, right?
So if you run a $223 billion company like Disney, you should earn 1/20th what Adam Sandler does to squeeze out a few bad movies for Netflix.
How about running a trillion dollar company like Microsoft, one of the most important companies in world history and critical to the US economy? Satya Nadella should probably earn less than Simon Cowell, #64 on the Forbes list at $43.5 million in earnings.
Why does Lebron James get to earn $85.5 million? The retort will always be: because James is worth it.
So is an elite CEO running a massive company. The reality is that today these are normal earnings figures for people operating in elite positions where enormous economic value is in play. People in these pay arguments always intentionally devalue the knowledge, experience and skill that is required to operate a company the scale of Disney (that's how they can lay out the premise with a straight face that average worker pay to CEO pay should be low): it's one of the most difficult jobs on earth, and far more difficult and challenging than anything Jimmy Garoppolo will ever do on a football field.
The average Lakers employee isn't worth 1/1000th what Lebron James is to the franchise. The average worker is not worth 1/1000th what Iger is to Disney. That's entirely correct economic math. It's that reality that irrationally upsets almost everyone, because they like to pretend it takes only modest knowledge, experience and skill to operate something like Disney, when in fact being able to do it well is a more rare talent than what the typical elite athlete represents. It's excused in sports only because supposedly that's easier to measure (and yet it still doesn't change the fact that Lebron James earns so much more than the typical worker in the Lakers organization).
https://www.forbes.com/celebrities/list/
Can you prove these CEOs are worth it?
That's the difference between CEO pay and literally every other example you've given here. In each of those other examples, the business is directly and measurably extracting value from the person getting all that money.
It's far more abstract for a CEO, and it's far harder to separate their contributions from "what would've happened regardless".
That's the difference between CEO pay and literally every other example you've given here. In each of those other examples, the business is directly and measurably extracting value from the person getting all that money.
It's far more abstract for a CEO, and it's far harder to separate their contributions from "what would've happened regardless".
So you argue that Lebron James provides more value to society than people running the companies that actually keep society productive? America's insane obsession with sports is amazing.
I’m not sure Disney is a productive company for society. I’d argue that Lebron James and Disney are purely for entertainment. And the owners of sports teams are able to attach value to the players by how many people they’ll draw to TV and stadium viewership and product sales, so Lebron’s value can be pretty well guessed in advance by the team that pays him that huge salary.
That's a really weird takeaway from what I said, which is that it's a lot easier to assign value to what Lebron James does.
A team gives him a specific amount of money to perform a very specific task, which is 'perform on a basketball court'. The team paying him believes that his performance will draw in fans and money to outweigh what they're paying him.
Netflix didn't pay Adam Sandler for 'thought leadership'. They paid him to deliver a certain number of films, which they know that they can extract a certain amount of value from.
The only way to measure executive leadership is the impact they've had on a company's valuation, and that impact cannot be as clearly tied to a single person as Lebron James' performance on the court, or Adam Sandler's (admittedly surprising given how bad his last several movies have been) star power.
A team gives him a specific amount of money to perform a very specific task, which is 'perform on a basketball court'. The team paying him believes that his performance will draw in fans and money to outweigh what they're paying him.
Netflix didn't pay Adam Sandler for 'thought leadership'. They paid him to deliver a certain number of films, which they know that they can extract a certain amount of value from.
The only way to measure executive leadership is the impact they've had on a company's valuation, and that impact cannot be as clearly tied to a single person as Lebron James' performance on the court, or Adam Sandler's (admittedly surprising given how bad his last several movies have been) star power.
And since the studies have shown that high-priced CEOs underperform, those Disney shareholders could have made a ton more money with a $1,000,000/year CEO. Too bad for them.
Also, if the stock has no value I'll take it off him for only a small handling fee. Deal?
Also, if the stock has no value I'll take it off him for only a small handling fee. Deal?
> Also, if the stock has no value I'll take it off him for only a small handling fee. Deal?
Sure, if he gave it to you, you can be certain the stock price of disney would be lower!
> And since the studies have shown that high-priced CEOs underperform, those Disney shareholders could have made a ton more money with a $1,000,000/year CEO. Too bad for them
You may be right. However, the disney shareholders are free to fire the CEO at any time and I am unclear why I -- a non disney shareholder -- really ought to care if they want to waste their money.
Sure, if he gave it to you, you can be certain the stock price of disney would be lower!
> And since the studies have shown that high-priced CEOs underperform, those Disney shareholders could have made a ton more money with a $1,000,000/year CEO. Too bad for them
You may be right. However, the disney shareholders are free to fire the CEO at any time and I am unclear why I -- a non disney shareholder -- really ought to care if they want to waste their money.
> Nevertheless, Iger couldn't sell this much stock without either being accused of insider trading (since such a large sale would surely manipulate the stock price), and the SECs regulations on insider trading are very strict (they prosecute based on the appearance of insider trading).
Lol, this is bullshit and pretending you know what you're talking about does a disservice to this conversation. You'd know this was bullshit if you did even a basic search, which would have alerted you to the fact that Iger has sold more than this in stock before.
Disney's market cap is gigantic, this would be a blip in the daily trade volume. He just has to schedule the sale and it's no problem.
Lol, this is bullshit and pretending you know what you're talking about does a disservice to this conversation. You'd know this was bullshit if you did even a basic search, which would have alerted you to the fact that Iger has sold more than this in stock before.
Disney's market cap is gigantic, this would be a blip in the daily trade volume. He just has to schedule the sale and it's no problem.
> millions upon millions of peoples retirements that are that much more secure
This got me curious - what proportion of corporate shares are owned by retirement funds? What proportion of shares are owned by the bottom ~90% of people by wealth?
This got me curious - what proportion of corporate shares are owned by retirement funds? What proportion of shares are owned by the bottom ~90% of people by wealth?
The top 10 percent own 84 percent of stocks [0]. About a third of stocks are owned by various retirement instruments (pensions, IRAs, etc) [1]. These numbers don't add up because it is an apples to oranges comparison, which might not be the breakdown OP was looking for.
0: http://www.nber.org/papers/w24085
1: https://www.taxpolicycenter.org/sites/default/files/alfresco...
0: http://www.nber.org/papers/w24085
1: https://www.taxpolicycenter.org/sites/default/files/alfresco...
But 84+33>100...? I know you have sources there, but something doesn’t as up.
I suppose there is overlap in top 10%, and retirement accounts. Also, top 10% are a lot of people, and they are probably mostly the ones close to retirement.
Not saying there’s not wealth inequality, but look towards the top .01%.
Also, I have an online brokerage account that I use to invest in stock. It’s not tax deferred, or labeled as retirement fund, but it is definitely a supplement to my 401k, and I only plan to withdraw as retirement. I would wager there’s a bit of “unlabeled” money like that out there too.
I suppose there is overlap in top 10%, and retirement accounts. Also, top 10% are a lot of people, and they are probably mostly the ones close to retirement.
Not saying there’s not wealth inequality, but look towards the top .01%.
Also, I have an online brokerage account that I use to invest in stock. It’s not tax deferred, or labeled as retirement fund, but it is definitely a supplement to my 401k, and I only plan to withdraw as retirement. I would wager there’s a bit of “unlabeled” money like that out there too.
> But 84+33>100...? I know you have sources there, but something doesn’t as up.
There's only a contradiction if the two groups are mutual exclusive. Retirement accounts belonging to those in the top 10% will be counted in both categories.
Assuming the data is good, a little math shows that less than half of stocks owned by retirement accounts belong to the bottom 90%.
There's only a contradiction if the two groups are mutual exclusive. Retirement accounts belonging to those in the top 10% will be counted in both categories.
Assuming the data is good, a little math shows that less than half of stocks owned by retirement accounts belong to the bottom 90%.
I wonder this every day about daily stock market trade volume.
What number of shares are institutional, hedge funds, retail investors, high frequency traders, etc.
I hear it all of the time: "the retail investors are buying into Tesla/Netflix heavy, it's really running the price up"
I really don't feel like the bottom 90% of retail investors can move the needle compared to big money, but I've never been able to prove it statistically.
What number of shares are institutional, hedge funds, retail investors, high frequency traders, etc.
I hear it all of the time: "the retail investors are buying into Tesla/Netflix heavy, it's really running the price up"
I really don't feel like the bottom 90% of retail investors can move the needle compared to big money, but I've never been able to prove it statistically.
This study suggests 37% https://www.taxpolicycenter.org/taxvox/only-about-one-quarte...
Doesn't it mean the system is flawed by design if you can't just pass the assets you legitimately own to a 3-rd party which wants it in exchange for cash without collapsing the market and attracting prosecutors?
What if he just wanted to retire buying an island, building a castle, moving there and forgetting the business, not because he believes the business isn't going to grow but because he feels it's enough for him? Or to switch to investing in a different industry (like ecology or education or whatever) not because it's going to be more profitable but because it feels more important...
What if he just wanted to retire buying an island, building a castle, moving there and forgetting the business, not because he believes the business isn't going to grow but because he feels it's enough for him? Or to switch to investing in a different industry (like ecology or education or whatever) not because it's going to be more profitable but because it feels more important...
> Doesn't it mean the system is flawed by design if you can't just pass the assets you legitimately own to a 3-rd party which wants it in exchange for cash without collapsing the market and attracting prosecutors?
No? If you have run something of value and you have a vested stake in its interest (i.e. a share) and you decide to get rid of them because you're either uninterested in that thing or you believe your money is better spent elsewhere, isn't it right that your lack of confidence in the very thing you run sends a signal to the rest of the market?
If the CEO of a non-profit decides to quit abruptly, wouldn't that make everyone rightfully worried over the future of that entity?
> What if he just wanted to retire buying an island, building a castle, moving there and forgetting the business, not because he believes the business isn't going to grow but because he feels it's enough for him?
Then, it's appropriate that the share price fall because the cost of transitioning leadership so abruptly will certainly affect the previously forecasted future earnings off of which the share price was established to begin with.
No? If you have run something of value and you have a vested stake in its interest (i.e. a share) and you decide to get rid of them because you're either uninterested in that thing or you believe your money is better spent elsewhere, isn't it right that your lack of confidence in the very thing you run sends a signal to the rest of the market?
If the CEO of a non-profit decides to quit abruptly, wouldn't that make everyone rightfully worried over the future of that entity?
> What if he just wanted to retire buying an island, building a castle, moving there and forgetting the business, not because he believes the business isn't going to grow but because he feels it's enough for him?
Then, it's appropriate that the share price fall because the cost of transitioning leadership so abruptly will certainly affect the previously forecasted future earnings off of which the share price was established to begin with.
> If the CEO of a non-profit decides to quit abruptly, wouldn't that make everyone rightfully worried over the future of that entity?
It feels very reasonable to worry yet it is not totally impossible a person may happen to want to quit for no business-relevant reason.
> Then, it's appropriate that the share price fall because the cost of transitioning leadership so abruptly will certainly affect the previously forecasted future earnings off of which the share price was established to begin with.
Makes sense but can't the new leader be and seem much better so the prices could actually rise?
It feels very reasonable to worry yet it is not totally impossible a person may happen to want to quit for no business-relevant reason.
> Then, it's appropriate that the share price fall because the cost of transitioning leadership so abruptly will certainly affect the previously forecasted future earnings off of which the share price was established to begin with.
Makes sense but can't the new leader be and seem much better so the prices could actually rise?
> It feels very reasonable to worry yet it is not totally impossible a person may happen to want to quit for no business-relevant reason.
Indeed, but that does not change the fact that the practical matter of transitioning leadership means there is certain to be some dysfunction. Not to mention that some CEOs end up running their business into the ground and it's not always obvious which ones will succeed and which won't. The uncertainty also drives the stock price down. There is no way to fix this (IMO), and this incentivizes the shareholders (in the form of the board) to offer whatever compensation necessary to prevent this kind of unnecessary leadership change, leading to the CEO salaries that some label as exorbitant.
> Makes sense but can't the new leader be and seem much better so the prices could actually rise?
Yes, but people are invested in the market for all sorts of reasons. Someone with a shorter term horizon (like someone retiring imminently) is likely to have their money invested in larger companies, because it is expected that larger companies have fewer management shifts and thus fewer price fluctuations.
Thus, while certainly a change in leadership can result in long term value increase, it has the effect of lowering the current value, and this can disproportionately affect some people.
Of course, for those with a longer time horizon, this is an opportunity for arbitrage.
Indeed, but that does not change the fact that the practical matter of transitioning leadership means there is certain to be some dysfunction. Not to mention that some CEOs end up running their business into the ground and it's not always obvious which ones will succeed and which won't. The uncertainty also drives the stock price down. There is no way to fix this (IMO), and this incentivizes the shareholders (in the form of the board) to offer whatever compensation necessary to prevent this kind of unnecessary leadership change, leading to the CEO salaries that some label as exorbitant.
> Makes sense but can't the new leader be and seem much better so the prices could actually rise?
Yes, but people are invested in the market for all sorts of reasons. Someone with a shorter term horizon (like someone retiring imminently) is likely to have their money invested in larger companies, because it is expected that larger companies have fewer management shifts and thus fewer price fluctuations.
Thus, while certainly a change in leadership can result in long term value increase, it has the effect of lowering the current value, and this can disproportionately affect some people.
Of course, for those with a longer time horizon, this is an opportunity for arbitrage.
> > Then, it's appropriate that the share price fall because the cost of transitioning leadership so abruptly will certainly affect the previously forecasted future earnings off of which the share price was established to begin with.
> Makes sense but can't the new leader be and seem much better so the prices could actually rise?
Companies are like dictatorships, there's no transition of power that can go smoothly. Of course, this kind of problem in institutions with similar scale (like governments) is mitigated by democracies, but corporations will never adopt something like this, it's anti-ethical to their values.
Companies are like dictatorships, there's no transition of power that can go smoothly. Of course, this kind of problem in institutions with similar scale (like governments) is mitigated by democracies, but corporations will never adopt something like this, it's anti-ethical to their values.
> Of course, this kind of problem in institutions with similar scale (like governments) is mitigated by democracies, but corporations will never adopt something like this, it's anti-ethical to their values.
What? No. Even democracies have a single head of government. The choice of that head may be distributed, but the identity of that person is not, and yes, they almost invariably have hiccups when power transitions happen.
Corporations are representative democracies, where the representatives are the board, and the voters the shareholders, although of course, you have to buy the ability to vote which changes the dynamics.
What? No. Even democracies have a single head of government. The choice of that head may be distributed, but the identity of that person is not, and yes, they almost invariably have hiccups when power transitions happen.
Corporations are representative democracies, where the representatives are the board, and the voters the shareholders, although of course, you have to buy the ability to vote which changes the dynamics.
By the way, what if a new form corporation could be introduced (not to replace the classic but as an alternative): a democratic corporation governed by all the people who work there the same way democracies work. So every employee would vote to elect the board members or the CEO. Could it be viable?
This is called a 'cooperative' and yes it's totally viable. Every corporation is a democracy, except the shareholders are not always the employees. In a coop, the shareholders (or at least the majority of shareholders) are employees (usually due to compensation schemes that give employees stock).
There are several examples of large coops, such as Mondragon, Winco, Publix, etc. They do not require any extraordinary corporate structure, and are completely compatible with the kind of free market capitalism many 'Western' countries have today.
There are several examples of large coops, such as Mondragon, Winco, Publix, etc. They do not require any extraordinary corporate structure, and are completely compatible with the kind of free market capitalism many 'Western' countries have today.
Why are there no cooperatives of this kind in the IT industry?
This is largely obviated by most corporations having multiple classes of shares. However corporations ARE democracies. The citizens are the shareholders and our ministers/government officials are the board of directors. Our civil servants are the employees (including executive employees)
> Doesn't it mean the system is flawed by design if you can't just pass the assets you legitimately own to a 3-rd party which wants it in exchange for cash without collapsing the market and attracting prosecutors?
Many regulations on the stock market are there because of past abuses. I'm typically rather anti-regulation as well, but it's like when you see "do not eat" labels on a box of razor blades: you know it's there because some one did it (and probably sued). Letting executives arbitrarily sell stock on a public exchange could have serious ramifications.
> What if he just wanted to retire buying an island, building a castle, moving there and forgetting the business, not because he believes the business isn't going to grow but because he feels it's enough for him?
His net worth is estimated at $350 million, from what I could find. Do you really think he's set an arbitrary target of $416 million net worth to just give up?
Many regulations on the stock market are there because of past abuses. I'm typically rather anti-regulation as well, but it's like when you see "do not eat" labels on a box of razor blades: you know it's there because some one did it (and probably sued). Letting executives arbitrarily sell stock on a public exchange could have serious ramifications.
> What if he just wanted to retire buying an island, building a castle, moving there and forgetting the business, not because he believes the business isn't going to grow but because he feels it's enough for him?
His net worth is estimated at $350 million, from what I could find. Do you really think he's set an arbitrary target of $416 million net worth to just give up?
> it's like when you see "do not eat" labels on a box of razor blades: you know it's there because some one did it (and probably sued).
By the way, is this an exaggeration or do things so ridiculous actually happen? Can I really sue and win if I eat a razor blade with no "do not eat" label on it? Or what if the label was there but I were blind or didn't speak English?
> do you really think he's set an arbitrary target of $416 million net worth to just give up?
This seems reasonable to doubt yet I don't think a person can't change their mind on half the way. E.g. he sets the target, works for it then feels overstressed occasionally and says to himself "I'm so tired of working, I already have $350 million which is enough to live happily for the rest of my life, let someone else take care of the business... Oh, and I want to donate half of the money to 3rd world charities..."
By the way, is this an exaggeration or do things so ridiculous actually happen? Can I really sue and win if I eat a razor blade with no "do not eat" label on it? Or what if the label was there but I were blind or didn't speak English?
> do you really think he's set an arbitrary target of $416 million net worth to just give up?
This seems reasonable to doubt yet I don't think a person can't change their mind on half the way. E.g. he sets the target, works for it then feels overstressed occasionally and says to himself "I'm so tired of working, I already have $350 million which is enough to live happily for the rest of my life, let someone else take care of the business... Oh, and I want to donate half of the money to 3rd world charities..."
> Many regulations on the stock market are there because of past abuses. I'm typically rather anti-regulation as well, but it's like when you see "do not eat" labels on a box of razor blades: you know it's there because some one did it (and probably sued). Letting executives arbitrarily sell stock on a public exchange could have serious ramifications.
The decline in price is not due to any regulation, but rather the free market. When people see many shares on sale, the price of the stock goes down due to free market principles. Let's not reach for blaming regulation when that does not change the fundamental nature of the game.
The decline in price is not due to any regulation, but rather the free market. When people see many shares on sale, the price of the stock goes down due to free market principles. Let's not reach for blaming regulation when that does not change the fundamental nature of the game.
CEOs can sell stock, they just have to do it on a set schedule. So yes, it's good to incentivize their performance based on how the company performs, but it's not like it's pretend money they can't use. It's a real asset and should be considered part of their compensation.
But the valuation should not be done at market value, because the CEO cannot realistically use that value without causing his own job to be in contention. If the CEO of disney sold stock (and it would have to be reported), everyone else would too, lowering the price of disney stock (and thus his net worth). Thus, valuing his compensation at $66 mil based on the stock price is wrong for everything but taxation, because realistically, he would get much less in cash if he decided to sell.
> What people forget in the debate over public company 'CEOs' is that, when the price of disney shares goes up from $24 to $135, that is millions upon millions of peoples retirements that are that much more secure.
I would happily accept that argument if we were talking about other sectors of the economy. Copyright trolling and rent-seeking in general, however, are not value-creating activities; on the contrary, they actively destroy value and wealth. For each person whose retirement has been "made more secure" by such a business, many more have been made substantially worse off.
I would happily accept that argument if we were talking about other sectors of the economy. Copyright trolling and rent-seeking in general, however, are not value-creating activities; on the contrary, they actively destroy value and wealth. For each person whose retirement has been "made more secure" by such a business, many more have been made substantially worse off.
Disney is copyright trolling? (This is a genuine question). Disney definitely enforces its own copyrights and intellectual property, but seeing as it created those ideas (like Mickey Mouse, etc), I'm not sure how you can call enforcing copies of this idea 'copyright trolling'. It seems only right that the company that made the cartoon profit off of its likeness. The government has perfectly reasonable regulation when others want to use likenesses or movie clips for 'fair use'.
> seeing as it created those ideas (like Mickey Mouse, etc)
Mickey Mouse, perhaps[0]. Many other Disney characters and broad ideas were ripped off of public domain work (sometimes it's even more complicated, see Winnie the Pooh - the original character was created by someone else and later licensed to Disney, but there certainly was a lot of subsequent controversy about the precise terms of that licensing deal!) with Disney then laying proprietary claims on them, and also lobbying for extended protections on their newly-proprietarized forms. That's a particularly obnoxious form of copyright trolling.
[0] Though, in many ways, Mickey Mouse is simply a technically-simplified form (serving the new medium of cartoon animation, which Walt Disney was then experimenting with) of an existing genre of cartoon/comic anthropomorphic mice (of which 'Teddy Tail' is the best-documented representative). Serendipitously, the changes - although introduced for merely technical reasons - also made the character a lot more popular, for the same reason why ubercheap anime characters from Japan are popular - humans are attracted to simple forms, symmetry and easily-read neotenous traits, and repelled by complexity and artistry. So Walt Disney had a good intuition to start with, but his creative success was for the most part a matter of serendipity and being in the right place. No way his character is worth billions of dollars - no anthropomorphic mouse in the freakin' noosphere is! /s
Mickey Mouse, perhaps[0]. Many other Disney characters and broad ideas were ripped off of public domain work (sometimes it's even more complicated, see Winnie the Pooh - the original character was created by someone else and later licensed to Disney, but there certainly was a lot of subsequent controversy about the precise terms of that licensing deal!) with Disney then laying proprietary claims on them, and also lobbying for extended protections on their newly-proprietarized forms. That's a particularly obnoxious form of copyright trolling.
[0] Though, in many ways, Mickey Mouse is simply a technically-simplified form (serving the new medium of cartoon animation, which Walt Disney was then experimenting with) of an existing genre of cartoon/comic anthropomorphic mice (of which 'Teddy Tail' is the best-documented representative). Serendipitously, the changes - although introduced for merely technical reasons - also made the character a lot more popular, for the same reason why ubercheap anime characters from Japan are popular - humans are attracted to simple forms, symmetry and easily-read neotenous traits, and repelled by complexity and artistry. So Walt Disney had a good intuition to start with, but his creative success was for the most part a matter of serendipity and being in the right place. No way his character is worth billions of dollars - no anthropomorphic mouse in the freakin' noosphere is! /s
> it's a real disservice to say he made $Xmillion in disney stock, given that the stock has no immediate cash value to him.
He can borrow against that stock and thus create immediate cash value.
He can borrow against that stock and thus create immediate cash value.
You are not wrong, but he has to pay the loan back. The only way to do that would be to increase the price of the stock along with the interest rate on the loan, and then sell the stock. Of course selling the stock would decrease the price he could get for future shares. Thus, the price increase in stock he'd have to generate would have to be greater than the interest rate on the loan he took out in order to account for this share price depression.
There are ways to get loans where the only source of collateral are the underlying shares. For example, this is common when employees take loans out to cover the strike price of their options from their company.
Why do people feel they need to explain basic financial vehicles?
Obviously, you can get loans like this. Loans have interest, which means you must be able to generate future income suitable to cover this interest. Iger does not make enough in cash to cover the interest on a loan against his shares. Thus, he would have to generate the cash in some other way. The only foreseeable way he would have to do this is to sell disney shares, but this would cause the shares to decrease in value (and thus he would be unable to make up the principal payment). In order for such a loan to work, the loan would have to be so small as to be unimportant, or he would have to drive up the share price enough after the loan was written to make up the principle and interest, taking into account the imminent depression in share price if he attempts to sell that many shares.
Obviously, you can get loans like this. Loans have interest, which means you must be able to generate future income suitable to cover this interest. Iger does not make enough in cash to cover the interest on a loan against his shares. Thus, he would have to generate the cash in some other way. The only foreseeable way he would have to do this is to sell disney shares, but this would cause the shares to decrease in value (and thus he would be unable to make up the principal payment). In order for such a loan to work, the loan would have to be so small as to be unimportant, or he would have to drive up the share price enough after the loan was written to make up the principle and interest, taking into account the imminent depression in share price if he attempts to sell that many shares.
I don’t believe it’s common knowledge that you can secure a loan where if you default, they can only take back the underlying shares as collateral.
Also, he makes more than enough to pay for the interest on said loans even if the loan size equates to his total compensation value.
Also, he makes more than enough to pay for the interest on said loans even if the loan size equates to his total compensation value.
> when the price of disney shares goes up from $24 to $135, that is millions upon millions of peoples retirements that are that much more secure
Sorry, this is just rubbish. None of that money gets distributed to retirements, even if they work at Disney. What sort of lies is this?
Sure, anyone that owns Disney shares does well if they sell the shares, but that is ANYONE.
Sorry, this is just rubbish. None of that money gets distributed to retirements, even if they work at Disney. What sort of lies is this?
Sure, anyone that owns Disney shares does well if they sell the shares, but that is ANYONE.
Not trying to be rude, but do you know retirement accounts work? That money isn’t just growing by magic. It’s invested.
And as a side note, I (living in Orlando) actually know several folks who invest heavily in Disney stock as Disney employees. I’m guessing they get a preferential price on it and it’s a growing investment for them.
And as a side note, I (living in Orlando) actually know several folks who invest heavily in Disney stock as Disney employees. I’m guessing they get a preferential price on it and it’s a growing investment for them.
> Sorry, this is just rubbish. None of that money gets distributed to retirements, even if they work at Disney. What sort of lies is this?
Disney is an S&P 500 company. Many mutual funds and retirement funds track the S&P 500 and various other indices. They do this by investing money in the public companies that make up those funds.
Of course it's not just S&P 500 companies that get invested in by institutional investors. Retirement funds typically seek to generate higher returns on retirement funds from younger employees. To do this, they have to invest in riskier businesses, which typically means smaller investments in larger numbers of newer businesses. Thus, to simplify things, we can pretty much say that any public company traded on a major stock exchange can (and does) affect the price of retirement savings accounts.
At the core of it, every public company, regardless of their business, is simply an investment vehicle in which people can put wealth in the hopes of competing successfully against inflation. The creation of a share price increase greater than inflation increases the wealth of the shareholders, and creates new money from thin air.
This creation of money is how all people can afford retirement. Simply saving your money in an account which keeps the nominal amount of cash would lead to loss from inflation. Most people will not contribute enough money to have enough in retirement savings. Thus, they depend in some way on the creation of money by private enterprise to subsidise their retirement.
This is true regardless of whether retirement accounts are self-directed (as in a 401k), centrally managed (as in a pension), or government run (as in social security). The connection to self-directed and managed accounts is obvious. Governments of course rely on the creation of money to fund tax revenue that is then put towards government retirement programs.
Disney is an S&P 500 company. Many mutual funds and retirement funds track the S&P 500 and various other indices. They do this by investing money in the public companies that make up those funds.
Of course it's not just S&P 500 companies that get invested in by institutional investors. Retirement funds typically seek to generate higher returns on retirement funds from younger employees. To do this, they have to invest in riskier businesses, which typically means smaller investments in larger numbers of newer businesses. Thus, to simplify things, we can pretty much say that any public company traded on a major stock exchange can (and does) affect the price of retirement savings accounts.
At the core of it, every public company, regardless of their business, is simply an investment vehicle in which people can put wealth in the hopes of competing successfully against inflation. The creation of a share price increase greater than inflation increases the wealth of the shareholders, and creates new money from thin air.
This creation of money is how all people can afford retirement. Simply saving your money in an account which keeps the nominal amount of cash would lead to loss from inflation. Most people will not contribute enough money to have enough in retirement savings. Thus, they depend in some way on the creation of money by private enterprise to subsidise their retirement.
This is true regardless of whether retirement accounts are self-directed (as in a 401k), centrally managed (as in a pension), or government run (as in social security). The connection to self-directed and managed accounts is obvious. Governments of course rely on the creation of money to fund tax revenue that is then put towards government retirement programs.
I think he’s referring to how retirement funds are invested into index funds.
> when the price of disney shares goes up from $24 to $135, that is millions upon millions of peoples retirements that are that much more secure
If by “that much” you mean “not much”, sure; there may be millions of people with retirement funds in the stock market, but not millions that are significantly exposed to Disney.
If by “that much” you mean “not much”, sure; there may be millions of people with retirement funds in the stock market, but not millions that are significantly exposed to Disney.
CEOs make or break the company. The best analogy is to look at CEOs who didn't do well. Consider Paul Otellini at Intel who missed the mobile processor boat completely when Steve Jobs approached him. Or maybe consider Mark Hurd or Carly Fiorina of HP who ransacked the company by cost cutting measures and acquiring Compaq! Or maybe look at Nokia's CEO Olli-Pekka Kallasvuo in 2008 who missed the entire smartphone wave!
Now assume each of these CEOs who failed massively made $5M/yr (very conservative estimate). Is Bob Iger 100x more than that given what he has done at Disney? From acquiring Marvel to BAMTech to having a streaming strategy laid out (and being executed on well) - Bob is definitely phenomenal and one of the core reason why Disney is in the position it is in terms of strategy and execution. Is that worth $66M/yr? Absolutely, in my opinion.
Now assume each of these CEOs who failed massively made $5M/yr (very conservative estimate). Is Bob Iger 100x more than that given what he has done at Disney? From acquiring Marvel to BAMTech to having a streaming strategy laid out (and being executed on well) - Bob is definitely phenomenal and one of the core reason why Disney is in the position it is in terms of strategy and execution. Is that worth $66M/yr? Absolutely, in my opinion.
What do the CEOs who fail and the CEOs who succeed have in common? They're both incredibly overpaid. The question should not be is Bob Iger worth X/year?
The question should be could he be paid a fraction of what he is in reality and do an equally good a job? Or could somebody else do an equally good a job as Bob for a fraction of the cost? The answer is almost always yes to both questions, and it applies to all companies not just Disney.
The question should be could he be paid a fraction of what he is in reality and do an equally good a job? Or could somebody else do an equally good a job as Bob for a fraction of the cost? The answer is almost always yes to both questions, and it applies to all companies not just Disney.
>The question should be could he be paid a fraction of what he is in reality and do an equally good a job?
Just because it's possible for him to do the same job at a lower salary doesn't mean he will. Disney needs to pay him enough so that he doesn't take a higher paying job elsewhere.
Just because it's possible for him to do the same job at a lower salary doesn't mean he will. Disney needs to pay him enough so that he doesn't take a higher paying job elsewhere.
It is surprising people don't get this dynamic. Extremely strong leaders are rare. And the market pays them for that skill.
> Extremely strong leaders are rare.
That’s what a Fortune 500 CEO would have you believe. There are over a billion English speakers in the world and you don’t think there are at least thousands of people (who aren’t already overpaid CEOs) that could be doing a better job than Iger, or any given Fortune 500 CEO for that matter?
That’s what a Fortune 500 CEO would have you believe. There are over a billion English speakers in the world and you don’t think there are at least thousands of people (who aren’t already overpaid CEOs) that could be doing a better job than Iger, or any given Fortune 500 CEO for that matter?
100s - probably yes. 1000s - absolutely not. Please help find those 1000 potential CEOs and pay them lower salary and see if the company still succeeds. Otherwise, you pay CEOs for the skill and experience they bring and keep them for the impact they make.
If all the credit and blame for success or failure is due to the CEO, why is anyone else paid at all?
Company strategy and focus matters. And CEOs have outsized powers in deciding that. The rest of the company 1) either executes the strategy 2) proposes new strategies - some of which bubbles upto CEO for their review/approvals and 3) are G&A (HR/FInance etc.).
If you removed the CEO (and any leadership), would there be any success to give credit for?
But these guys are being compensated in the millions regardless of whether they are making or breaking the company. Why are they earning $5M for failing massively? If I fail massively at my job I get fired and probably have tons of trouble getting my next job. If a CEO fails massively they get millions in golden parachute, a board seat on someone else’s company, before they become CEO again somewhere else. I would buy the “they get paid for their performance” line if I ever met a homeless or starving ex-CEO. Still waiting to see that one.
Shareholders are burning their money. I would have gladly done the job of “fail to turn around Yahoo” for a mere 1/1000th of what MM took home.
Shareholders are burning their money. I would have gladly done the job of “fail to turn around Yahoo” for a mere 1/1000th of what MM took home.
Would giving one of the ceos in your example a 10x increase in pay have led to a better outcome for the company? I'm not convinced that it would.
Disney's greatest sin is locking away our culture through lobbying Congress to extend copyrights. In my opinion it is a much greater problem than ridiculous CEO pay (and a super rich shareholder complaining about it)
As much as I agree with you (and believe me, I do); this is changing the subject. She can be a hypocrite, but that doesn't make her wrong. It just makes her a hypocrite.
Although, I do have to say, the closing paragraph is particularly jarring:
> “It is possible to say no to money,” she said. “If CEOs don’t lead this by making a conscious ethos shift, then I don’t know where we’re gonna go.”
Owch...
Although, I do have to say, the closing paragraph is particularly jarring:
> “It is possible to say no to money,” she said. “If CEOs don’t lead this by making a conscious ethos shift, then I don’t know where we’re gonna go.”
Owch...
Abigail Disney has $500 million, the majority of which she inherited. Does she think that she is worth that money?
No person thinks they have too much. It’s always someone richer than them that has too much. You are always struggling and underpaid, it’s the other guy who makes too much undeservedly.
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If you only draw on 4 percent of that endowment every year, that's still only 20 million a year. Maybe a bit less, considering the stock was down 2 percent in 2018.
Wikipedia says that Disney has 201,000 employees, so that's $328 for each employee he's responsible for. Alternatively, he makes .11% of what Disney brings in each year in revenue.
The scale of the company is absurd, but his compensation doesn't seem to out of whack for it.
The scale of the company is absurd, but his compensation doesn't seem to out of whack for it.
> doesn't seem to out of whack for it.
And that is part of the problem. Somehow this has become ok, but workers unable to live on a single wage is not.
And that is part of the problem. Somehow this has become ok, but workers unable to live on a single wage is not.
I believe you are on the right track. It's the iceberg issue, no matter how much the CEO makes it's the factors at the bottom which make the difference, i.e. how much workers get paid in general.
However in saying that we live in a culture and climate which pays people somewhat (mostly) on the value of the services/skills they provide. So if you're a janitor, then you are probably going to get a low salary and it would be hard to justify increasing that salary simply because the cost of living is high.
If this guy earns $660,000 or $66m, the problem at the lower end still exists.
However in saying that we live in a culture and climate which pays people somewhat (mostly) on the value of the services/skills they provide. So if you're a janitor, then you are probably going to get a low salary and it would be hard to justify increasing that salary simply because the cost of living is high.
If this guy earns $660,000 or $66m, the problem at the lower end still exists.
> The 59-year-old, whose grandfather Roy O Disney co-founded the Walt Disney Company with his animator brother, inherited a share of her family’s wealth, and is reported to be worth $500m.
So I'm guessing she doesn't think her grandfather was worth that kind of money back in the day either...
So I'm guessing she doesn't think her grandfather was worth that kind of money back in the day either...
If anything, inheritance is a monumentally more significant inhibitor to anything approaching "equity" than CEO pay.
Yeah I was thinking that she donates all her money or something, but if not this is just a capital owner shitting on a worker (albeit highly paid).
From WikiPedia "Abigail E. Disney (born January 24, 1960) is an American documentary filmmaker, philanthropist, and activist known for her documentary films focused on social themes.".
Her background/experience does not make her an expert in employee compensation. Am I missing something to this, other than her family name, of course?
Her background/experience does not make her an expert in employee compensation. Am I missing something to this, other than her family name, of course?
No but you're undervaluing her family name.
Counterpoints: Michael Jordan in basketball: without him millions wouldn’t watch the NBA, Gatorade and Nike wouldn’t have become the cultural juggernauts they are today...for all that he was only paid ~1 Billion. Tiger Woods in golf. Steph Curry made the sleepy warriors worth over 2 billion resulting in a 1.6 billion net worth increase for the owners. He has only recieved, for his efforts, maybe 100 million. Roger Goodell, as much as I hate him, has managed to screw over the working class nfl players with a settlement bordering on criminal, but the owners of NFL teams love him for it, they’ve all gotten billions of dollars more richer, and for all this Goodell has only been paid around 300 million.
Amazing how little anyone is mentioning that Abigail Disney who is worth half a billion dollars purely by virtue of being born rich May be on thin ice criticizing the lay of someone who actually works for a living. She says CEOs can say no to excessive comp but I don’t see her giving back 90% of her inheritance to charity which would still leave her with 50mm dollars! No I’m not defending excess CEO comp, the underpayment of workers, or wealth inequalty. I just find her to be a very strange and non self aware avatar for this movement.
It just sits oddly for me.
Her ancestors made a ton of money, and now she lives comfortably and is widely quoted in the media. Now she's 'pulling the ladder up' so the current CEO's kids won't get the same benefits.
Not that I don't think the salary is grossly excessive-- I definitely do. I just think she's an odd poster child for the protest voice.
Her ancestors made a ton of money, and now she lives comfortably and is widely quoted in the media. Now she's 'pulling the ladder up' so the current CEO's kids won't get the same benefits.
Not that I don't think the salary is grossly excessive-- I definitely do. I just think she's an odd poster child for the protest voice.
I think it’s interesting to think Iger can work at this salary for another century, and still not come close to touching the wealth of Bezos (and god knows how much that wealth will increase over that time).
And she is worth so much for just being born to somebody, didn't any skill to be rich, she might as well be an accidental impregnation.
Rules of the game are what they are right now and CEOs play by them. Change the rules, players will adapt. How to do that I’ve no idea.
> She also has a net worth reported to be in the $500 million range.
Not sure what she is complaining about.
Not sure what she is complaining about.
A good CEO is a force multiplier. Every single employee (and investor) in the company benefits in ways large and small for having a great CEO at the helm, and would suffer for having a worse CEO. In this sense, for a company with 200,000 employees (wow, that many?) is it worth $330 to each employee to have Iger at the helm? Of course the employees aren’t bearing the whole cost, so how about a third of that? I would certainly pay $100 out of my pocket once a year to work for a “Legendary” CEO versus a mediocre or merely good CEO.
We know that, unquestionably, a bad CEO (or the wrong CEO for the type of company or the growth cycle of the company) can doom that company despite the best and most heiroic efforts of the other employees. That is reason enough to invest highly in finding and compensating your CEO.
That is not to say that the converse is true; that a fantastic CEO can make a company grow despite poor effort from the other employees.
We can’t even say for sure that a fantastic CEO can be considered “responsible” for the success of their hardworking company, although there is certainly plenty of anecdotal data which shows certain decisions were extremely prescient or certain strategies which paid off handsomely that were driven by a CEO despite widespread skepticism.
It’s also worth considering what the CEO compensation would have been had a company not been so incredibly successful. Performance based options aren’t worth anything if the stock never rises.
Personally, I think the equity model is very flawed, but better than anything else we’ve tried. Speaking as a solo founder, the idea that I start out as 100% owner doing 100% of the work makes perfect sense.
But then you earn some revenue, or raise funding, and start hiring. As a company grows its success is the result of massive amounts of work done by a large group of talented workers who are largely compensated through cash salary, and maybe get token amounts of equity in the company.
But throughout this process of growth, the original founders may not even work for the company anymore. They may have driven it nearly to death and been kicked to the curb. But could still own double-digit percentage of the equity, and as a result become wealthy on the back of the company they own.
Why does being the Founder entitle a person to ownership of all that value creation that comes later?
I imagine a system where equity shares are distributed/generated through some work-valuation model on a monthly or annual basis, and those shares are either sufficiently diluted by the new share issuance over time, or actually have some sort of expiration function built into them. In short, workers should be getting a significant fraction of the company in new share issuance each year, but that ownership should not be perpetual.
This ongoing dillution would have pretty significant issues however on the flip side of the equation, which is the share valuation to investors who have paid to hold shares in return for future returns or expected capital appreciation. No investor would fund your startup and allow the levels of dilution I think would be required to make the system more fair toward workers. I do wonder if it’s possible to address this with two classes of shares somehow.
We know that, unquestionably, a bad CEO (or the wrong CEO for the type of company or the growth cycle of the company) can doom that company despite the best and most heiroic efforts of the other employees. That is reason enough to invest highly in finding and compensating your CEO.
That is not to say that the converse is true; that a fantastic CEO can make a company grow despite poor effort from the other employees.
We can’t even say for sure that a fantastic CEO can be considered “responsible” for the success of their hardworking company, although there is certainly plenty of anecdotal data which shows certain decisions were extremely prescient or certain strategies which paid off handsomely that were driven by a CEO despite widespread skepticism.
It’s also worth considering what the CEO compensation would have been had a company not been so incredibly successful. Performance based options aren’t worth anything if the stock never rises.
Personally, I think the equity model is very flawed, but better than anything else we’ve tried. Speaking as a solo founder, the idea that I start out as 100% owner doing 100% of the work makes perfect sense.
But then you earn some revenue, or raise funding, and start hiring. As a company grows its success is the result of massive amounts of work done by a large group of talented workers who are largely compensated through cash salary, and maybe get token amounts of equity in the company.
But throughout this process of growth, the original founders may not even work for the company anymore. They may have driven it nearly to death and been kicked to the curb. But could still own double-digit percentage of the equity, and as a result become wealthy on the back of the company they own.
Why does being the Founder entitle a person to ownership of all that value creation that comes later?
I imagine a system where equity shares are distributed/generated through some work-valuation model on a monthly or annual basis, and those shares are either sufficiently diluted by the new share issuance over time, or actually have some sort of expiration function built into them. In short, workers should be getting a significant fraction of the company in new share issuance each year, but that ownership should not be perpetual.
This ongoing dillution would have pretty significant issues however on the flip side of the equation, which is the share valuation to investors who have paid to hold shares in return for future returns or expected capital appreciation. No investor would fund your startup and allow the levels of dilution I think would be required to make the system more fair toward workers. I do wonder if it’s possible to address this with two classes of shares somehow.
I fail to understand the root of the controversy here. I do realize that sixty-six million dollars is massive pay, but it is insignificant on a broader scale. Are some overcompensated? Of course. But a great CEO deserves great pay for having a rare talent: being an excellent leader. A bad CEO will sink a company; a great one will bring it success.
More importantly, it seems that much of the objection comes down to jealousy. If you took this guy's pay away and divided it among all disney employees, they would get about $325 a piece. He also arguably contributes orders of magnitude more value than a random disney employee. Finally, in this kind of jobs market, it seems that employees would have greater options. So I honestly ask: why are some so upset about this? I think he is indeed worth that much (based on disney's stock performance during his tenure, the market agrees). Is this just jealousy?
Finally, Bob Iger has gotten rich by working lucrative jobs. Mrs. Disney got rich by being born to a certain person. Hypocrite.
Downvoters care to comment?
More importantly, it seems that much of the objection comes down to jealousy. If you took this guy's pay away and divided it among all disney employees, they would get about $325 a piece. He also arguably contributes orders of magnitude more value than a random disney employee. Finally, in this kind of jobs market, it seems that employees would have greater options. So I honestly ask: why are some so upset about this? I think he is indeed worth that much (based on disney's stock performance during his tenure, the market agrees). Is this just jealousy?
Finally, Bob Iger has gotten rich by working lucrative jobs. Mrs. Disney got rich by being born to a certain person. Hypocrite.
Downvoters care to comment?
A more interesting article about Abigail Disney came out a few weeks ago: https://news.ycombinator.com/item?id=19524325