Inept leaders take notice.

[altiplano]

Modern CEOs need to take notice as to what real leadership is... an already rich man turning down a$75 million bonus, not playing the shortgame and getting his people behind him. C
suites and goverments take notice.

AllThingsD • by John Paczkowski • 9 hours ago Apple CEO Tim Cook's Stock Rises With Choice to Turn Down $75 Million Dividend

Apple CEO Tim Cook is proving himself as much a master of employee and investor relations as he is of operational efficiency. His decisions to create a charitable matching program for Apple employees and to grant a long-pined-for dividend to company shareholders have won him a lot of favor among both groups, while putting his own stamp on Apple. And now Cook has made another move for which he’s likely to win accolades.

Cook is forgoing $75 million in dividends to which he’s entitled.

In a Thursday SEC filing, Apple announced plans to award a $2.65-a-share quarterly dividend on restricted stock units held by its employees. It’s a nice — and unusual — perk to offer (and one certain to cement employee loyalty in a very competitive talent arena), but Cook is passing it up.

At Mr. Cook’s request, none of his restricted stock units will participate in dividend equivalents. Assuming a quarterly dividend of $2.65 per share over the vesting periods of his 1.125 million outstanding restricted stock units, Mr. Cook will forego approximately $75 million in dividend equivalent value.

That’s a lot of money to turn down. True, Cook is very well compensated — deservedly so, considering Apple’s performance — so he can obviously afford to forgo it. But, as best I can tell, he didn’t have to.

So Cook truly did just walk away from $75 million. Which is remarkable for an executive of his standing in an era when entitlement, greed and arrogance are so often part of the job description. Which is not to say that he’s not reaping some benefits here. There’s a lot of mileage for Apple in a symbolic gesture like this, and Cook profits when Apple’s overall value increases.

Say what you will, but this was a classy gesture up and down. When was the last time you saw headlines about a successful CEO of a wildly successful company walking away from millions of dollars that he could have just as easily pocketed?

Clearly, Cook is focused on more important and interesting things than having the biggest yacht in the harbor.

[CanadianEh]

In stark contrast, Air Canada CEO Calin Rovinescu recently gladly accepted his $5 million retention bonus while Air Canada's share price has fallen over 75%, employee dissatisfaction has reached a pinnacle and employee pensions funds are left underfunded.

Good on you Calin, you miserable piece of garbage.

[BTyyj]

Whenever I think of a good airline CEO in terms of taking pay cuts when the times are tough, I think of him: http://boingboing.net/2011/02/25/japan- ... ceo-p.html

[snoopy]

Now THAT is truly a classy gentleman. Thank you for sharing that Frosty.
Cheers,
Kirsten B.

[Colonel Sanders]

We all think of CEO's as opportunistic scum, but that is
not always the case. I was lucky enough to work for
John Chambers, who was as ethical and honourable a
man as you could hope for. And effective!

Since January 1995, when he assumed the role
of CEO, the company has grown from $1.2 billion in annual
revenues to its current run-rate of approximately $40 billion

[goldeneagle]

Aiming such spite at the CEO, just shows how little folks know about how the upper end of management truely works.

The board of directors create policy and governance, which is passed to the CEO for implementation. In essence, the CEO is the only employee that answers directly to the board, and participates in board meetings, altho in larger organizations, the CFO will have a similar role related to finance. After the board issues policy directives to management, it is the responsibility of the CEO to execute those policies.

In the AC case, retention bonus etc are paid, because the board believes the CEO had done a good job of implementing the policies forthcoming from board agenda. I keep reading on this site, how much spite there is related to the AC situation and the CEO, yet, not a single post regarding the board of directors. If you think the CEO is responsible for current conditions, you are VERY wrong. The CEO is just a full time employee, executing on board directives. The board is where your spite should be aimed.

I often wonder, with such animosity in the organization, why employees as a whole, have not banded together and voted all shares owned by those employees, to replace board members at an AGM. Surely amongst the entire employee group, there are enough shares held, to have a significant impact on board member selection ? If you want to change things, policy flows down the chain of command, it's kind of like the plumbers rule. Aiming at the CEO is not really high enough to have a direct influence on policy. To change the policies, you need to change the board of directors, and that is accomplished at the annual shareholders meeting, by voting large blocks of ownership, one share = one vote. At current share pricing, even AC employees can probably afford to acquire a few votes each, and, once they are all merged into a single voting block, change can begin.

[Expat]

Just look at CP now.
When an opportunist Fund manager buys into a company, he normally wants quick turn around and profits. He will pick the CEO for the job, and pay him handsomely.

[Gannet167]

It might be a great PR move and a gesture of company loyalty - but I can't see how this has much to do with leadership.

Why did he forego the money? What purpose does losing that $75 m serve for him? It's an expensive way to make friends. In any event, that's his decision and although I really don't care what the CEO of Apple does, I would not turn down my entitlements (particularly deserved ones) and I don't think that makes me a poor leader (or a good one).

It would be a different case if we were talking about a bankrupt and down and out organization, like Chrysler where Lee Iaccoca took a $1 per year salary. Here, Iaccoca put the health of the organization first and set an example. That was putting the "mission and the men" (so to speak) before himself - and it was a great symbolic measure to get the team united and working in the right direction. He was massively successful at several companies he turned around and made profitable again.

Apple is a different case. It's worth more than the entire country of Poland, and many others. The whole point of a corporation (including those in the aviation industry) is to make profit. It's what makes the world go around (at least until the students in Montreal have their way and the great communist revolution takes hold). Apple is so incredibly profitable it literally doesn't know what to do with all it's money. From a finance perspective - it's a bit of a problem, albeit a nice problem to have. There's no merit in working so hard to make this company make money (which it's suppose to do) and then not taking any of the excessive money laying around. Who cares?

Had he donated it to charity, it would be a noble philanthropic action. But he effectively donated $75 to Apple - one of the world's most profitable corporations that has so much cash, they are scratching their heads over what to do with it. I don't see how this is an act of leadership.

Nope, to me leadership is behaviours and characteristics that makes a person become prominent in a group and very effectively organize and inspire the group to achieve common tasks with great success. Leadership does not relate to "market leadership" where you build a better mousetrap, or "financial leadership" where you make more money. Leadership is about people and guiding their activities. Iaccoca showed leadership by setting an example and getting a company profitable again (for the sole reason of allowing shareholders to access millions in profits) But, donating money to a profitable corporation has nothing to do with leadership. What example is Apple's CEO setting? Should all the other Apple employees take his example and ask for a pay cut? Apple's CEO may be a great leader and probably is - given the successes of Apple. But this isn't indicative of his leadership - it's just financial idiocy.

[Colonel Sanders]

financial idiocy

Perhaps he thought that the existing ratio of his (CEO) compensation to average worker compensation, was already excessive before the $75M, as it is with so many North American corporations.

In 1965, the ratio was 25 to 1. Today the ratio is 325 to 1.

That, my friend, is true financial idiocy - especially when the corporation is tanking.

The most mind-boggling of all, is when corporations in bankruptcy pay huge retention bonuses to upper management, which always seemed to get approved for some reason. Why would you want those donkeys to stick around?! They got you into the mess. Like you need more from them?

[TG]

Whenever I think of a good airline CEO in terms of taking pay cuts when the times are tough, I think of him: http://boingboing.net/2011/02/25/japan- ... ceo-p.html

Like him, I'll choose a pay cut and eating with the employees at the cafeteria.

Instead of Harakiri

[Colonel Sanders]

In the paper this morning:

http://fullcomment.nationalpost.com/201 ... than-ever/

CEO pay report shows the 1% getting more 1% than ever

The 1% got some bad news today. According to an analysis by the Associated Press, the chief executive of a typical company listed on a U.S. stock market made US$9.6 million last year. That’s an increase of more than 6% over the previous year. It’s also the highest since AP started tracking executive pay five years ago.

In other words, the 1% are getting more 1% than ever. You may have noticed that the past few years haven’t been the best of times for the U.S. economy. It is allegedly no longer in recession, but it’s been hard to tell, and anyway there are serious fears it may soon tip back into a downturn. The unemployment rate remains above 8%. The Bureau of Labour Statistics reported 1,388 mass layoffs in April, affecting 135,600 workers.

But the CEOs get richer. Across the U.S., people are feeling the pinch. The city of Detroit is so broke it’s considering shutting off half of its street lights. The overwhelming issue in the November presidential election will be the economy, and which of the two candidates might finally do something to ease the pain. There are arguments the U.S. might never recover the confidence in itself that prevailed before Wall Street sent everything off the rails.

But the CEOs keep getting richer.

One could also opine that Warren Buffett is a "financial idiot" because he publicly stated that his income tax was too low. Do you think you know more about finance than Warren Buffett?

[Beefitarian]

Well that seems to me colonel that even though you have a excellent point when you wrote about that liberal guy that said, "I'm untitled to my intitlements." maybe the wealthy guys are feeling entitled to theirs.

I guess at least they did do more to cause their source instead of just robbing it from taxes.

[Colonel Sanders]

maybe the wealthy guys are feeling entitled

Perhaps, but I think it's simpler than that. Slimeballs steal as
much as they think they can get away with, without actually
going to jail. Occasionally - not often - they get caught
stepping over the line.

Pop Quiz: How many people on Wall St went to jail for
the sub-prime mortgage derivatives fraud, which resulted
in a near-collapse of the US financial system and losses
in the billions of dollars?

Food for thought: if you get caught swiping $100 from
Canadian Tire, the cops will arrest you, and you're going
to jail.

If you wear an expensive suit and suspenders and swindle
a billion bucks on Wall St, well, that's all just fun and white
collar games, isn't it?

[altiplano]

"Idiocy"

Yeah the guy running Apple must be an idiot... pay package is already valued upwards of $378 million...

What he has done is shown his level of commitment to his organization, that it isn't only the money that drives him. I don't think he is leading his employees with a do as I do example in a literal sense.

"Great PR move, gesture of company loyalty" yet nothing to do with leadership or motivating or inspiring? I would suggest every move a man in this position makes involves leadership - intended or not.

[BTyyj]

Aiming such spite at the CEO, just shows how little folks know about how the upper end of management truely works.

The board of directors create policy and governance, which is passed to the CEO for implementation. In essence, the CEO is the only employee that answers directly to the board, and participates in board meetings, altho in larger organizations, the CFO will have a similar role related to finance. After the board issues policy directives to management, it is the responsibility of the CEO to execute those policies.

goldeneagle, I don't think people are too far off.

Calin Rovinescu is part of the board of directors. I am quite certain that he doesn't have too much trouble getting the rest of the board to follow his own agenda. So in essence, as a CEO he is an employee of Air Canada and answers to the board, but as he's also a board member with a high degree of power, he is just answering to himself.

As for the Apple CEO, does anybody know what his shares in the company are? The long term results of this move may prove more profitable for him rather than simply taking the $75 million. He has also proven that he is in it the for the long haul and isn't simply looking for a quick buck. I think this gesture extends a lot further than what people are suggesting.

Pop Quiz: How many people on Wall St went to jail for
the sub-prime mortgage derivatives fraud, which resulted
in a near-collapse of the US financial system and losses
in the billions of dollars?

I would guess none or very few. Most of them seem to still be making millions at the top end of investment firms, banks, or insurance companies. The rest are part of Obama's administration. Funny how things work in our society.

[Shiny Side Up]

If you wear an expensive suit and suspenders and swindle
a billion bucks on Wall St, well, that's all just fun and white
collar games, isn't it?

I never thought I'd see the day. sniff, wipes tear from eye.

Comrade, welcome to the revolution.

[Gannet167]

Perhaps he thought that the existing ratio of his (CEO) compensation to average worker compensation, was already excessive before the $75M, as it is with so many North American corporations.

In 1965, the ratio was 25 to 1. Today the ratio is 325 to 1.

That, my friend, is true financial idiocy - especially when the corporation is tanking.

The most mind-boggling of all, is when corporations in bankruptcy pay huge retention bonuses to upper management, which always seemed to get approved for some reason. Why would you want those donkeys to stick around?! They got you into the mess. Like you need more from them?

That's great Colonel, but the corporation ISN'T tanking. It's doing what corporations are setup to do - make money. You're point or the connection between bankrupt corporations, retention bonuses, and Apple computers is unclear. That really has nothing to do with the point. If he doesn't take the money - it sits in the company. He is donating money to an immensely profitable company. I don't get how that makes him a swell guy. He has personally lost $75m, who benefited? Orphans? Cancer research? Nope, the world's richest corporation. Hmmf. Ok.

One could also opine that Warren Buffett is a "financial idiot" because he publicly stated that his income tax was too low. Do you think you know more about finance than Warren Buffett?

What are you getting at with this? What does Buffet have to do with any of this? This is completely off topic and has little to do with anything. Tax policy is a fully separate subject although I tend to agree with Buffet. He certainly does not forgo his dividends. So using him as your benchmark of financial decision making - I suppose he reaffirms that donating money to an immensely profitable corporation is quite odd, and really doesn't make much sense. You're right, Buffet knows a lot about money - clearly more than Apple's CEO.

[Colonel Sanders]

If he doesn't take the money - it sits in the company

You completely missed my point about executive compensation, specifically the ratio between the CEO and average worker.

Perhaps he feels comfortable with 500:1 but does not feel that 1000:1 is appropriate. I think both are obscene and opportunistic - the supply of CEO's is really quite plentiful - but that's just my opinion.

[Gannet167]

As for the Apple CEO, does anybody know what his shares in the company are? The long term results of this move may prove more profitable for him rather than simply taking the $75 million. .

I thought the same thing - except, according to the article, he has directed that his shares wont participate. He's not turning the dividends back into more shares, he is truly saying that he doesn't want his shares share of the profits. So, the company is $75m better off - and he as a shareholder is partially better off as well - but only his share. If he owned 10% of the shares, for example, he's donated to himself $7.5m. No matter how you see it, he's losing money.

If this is leadership, then I guess everyone else who accepts their dividends is less of a leader.

[Gannet167]

You completely missed my point about executive compensation, specifically the ratio between the CEO and average worker.

Perhaps he feels comfortable with 500:1 but does not feel that 1000:1 is appropriate. I think both are obscene and opportunistic - the supply of CEO's is really quite plentiful - but that's just my opinion.

I see what you're saying. The thing is, this isn't executive compensation. It's not compensation for anything actually, we're not talking about his salary or benefits package. He is a shareholder in a company, just like you or I could be. That company made money (it's the whole point of owning shares). He doesn't want the profits that his shares are "sharing" in. I don't see the moral or ethical essence of this. He is just donating money to the world's richest company. Had he directed it to a charity or to his employees as bonuses, sure, that'd be a great move. But he donated it to the richest company in the world. Very confusing.

[Colonel Sanders]

He is a shareholder in a company, just like you or I could be

Not quite. Were those shares part of his compensation? I highly suspect
so, therefore the $75M was derived from his compensation.

But he donated it

No, he never had the money. He never accepted it, and never paid taxes on it, so he was never in a position to donate whatever was left over.

You cannot donate something you never had.

Are you familiar with this thing called "income taxes"? It would appear that you are not, and he decided not to accept and therefore not pay income tax on this amount, which would have been in the neighborhood of at least $30M, from a rough gander at US Federal and California state income tax.

Not sure why you're so cranked up about it. It would appear the the government is the big loser here, which has missed out on $30M for doing absolutely nothing. Are you in the employ of the government? Is that why you're so upset?

[Genetk44]

Maybe the guy just decided he had enough money and didnt need any more at this point in time.
It's kind of amazing that for years CEOs have been getting sh*t on, quite rightly IMHO, for taking hugely obscene compensation packages and bonuses and now when one refuses a huge chunk of money his motives are questioned. Read the article..."to grant a long-pined-for dividend to company shareholders"
So he granted a huge cash benefit that all the employees apparently have wanted for a long time and that as an employee he also was entitled to, he refused his share of it ....seems like a good example for other CEOs to me.

[Colonel Sanders]

seems like a good example for other CEOs

Many CEO's have made symbolic gestures of taking
a dollar a year as salary. I guess they are financial
idiots, too, because they aren't stealing everything
that isn't nailed down.

PS Don't feel too sorry for a CEO making a buck a
year. If he actually performs, and the company performs,
the tens of millions he will profit from his stock options
will dwarf his salary.

[Genetk44]

Who is feeling sorry for them CS?

[126.7_STFU]

maybe the wealthy guys are feeling entitled

Pop Quiz: How many people on Wall St went to jail for
the sub-prime mortgage derivatives fraud, which resulted
in a near-collapse of the US financial system and losses
in the billions of dollars?

Must correct ! Trillions were lost overnight. The next 2 years are going to be interesting. The greed is still rampant, nobody is in jail, and people are being cut from all walks of life. Only a matter of time really.