I was recently reviewing management incentives at $AAPL, $MSFT, $GOOG, $AMZN, and $META in their 2022 proxy statements.
My best to worst ranking purely on incentive structure below:
In 2011, AAPL granted time-based RSUs to Tim Cook with no performance condition i.e. as long as Cook remains CEO, he would receive the RSUs in two installments: 2016 and 2021.
See original 2011 grant here:
If $AAPL were bottom-third among S&P 500 companies, Cook would receive zero RSUs.
Such a gutsy move by a CEO to align his compensation with the stock performance when probably much of the Wall Street expected AAPL to be terminally ill by 2021.
No wonder someone in Omaha liked this stock.
If AAPL beats 85% of S&P 500 companies, management will receive 200% of target RSUs.
A bit similar to AAPL, but slightly more favorable to the management than AAPL's. If $GOOG beats 75% of S&P 500 companies, management will receive 200% of target Performance Stock Units (PSUs).
I don't like their long-term equity incentive plan. Strange to see no profitability or ROIC metric for such a company.
"LinkedIn session", seriously? No wonder it's filled with cringe posts.
This incentive structure overly incentivizes for topline growth and doesn't save shareholders from value destructive acquisitions or capital allocations.
Andy Jassy receives time-based RSUs with no performance condition attached. It is similar to what Cook received originally in 2011. Jassy's RSUs were granted at $166.7/share.
Not good.
It's comical that Wehner was, in fact, awarded for 2H'21 perf. when he was essentially lighting cash in fire by buying back stocks at $330.
Not cool.
Given PYPL's own incentive shortcomings, I'm not optimistic we'll see much change here.
βWell, I think Iβve been in the top 5% of my age cohort all my life in understanding the power of incentives, and all my life Iβve underestimated it. And never a year passes but I get some surprise that pushes my limit a little farther.β
I'll leave it there.
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