$344m Richer?

So I'm not sure if you heard, but Apple's new CEO just received almost $344m in compensation. this is almost entirely composed of stock options.

Outrageous for just a few months of work. Right?

Maybe not.

What headlines don't tell you is how stock options work. Basically these options have a time limit after how many days/months/years they can be exercised. This entices managers to work hard so that shareholder's wealth and share price goes up. This causes an elimination of the Agency Problem, as managers would work in favor of increasing share price.

In addition, Cook's stock options don't become valid until 5-10 years. A simple average shows that the average yearly compensation is $37m. It may seem a lot, but I guess that may be acceptable compared to the market cap of Apple.

What I don't sympathize is that while the big bosses make the big bucks, the employees and the small fishes at Apple make extremely little. I guess that's the rationale of many of the Occupy Protesters.

Do you think this gap between employee compensation and manager/director compensation should be narrowed? Hmm.

Anyway, We're done with exams today. Although the battle is over, the war has not been won YET. Soon. Very soon. It shall all be over. We would have graduated by mid-year (most of us anyway). Good luck to us with the uphill struggle.

Cheers

- Mazaher