Breaking news Busybodies Marcelo Car...Clar...Claire? Clark?
I'm thinking Clar...Claure?
It doesn't matter
It doesn't matter.
The dude's asking for a billion dollar bonus! Actually 2 billion! And then it turned into a billion somewhere in there, but either way, what?
Shot down for a two, apparently, or at least $1 billion bonus. That's a rough day at the office.
I mean...
We did that episode recently...we're about to do an episode...we will soon release an episode about asking for more money. Imagine asking for that much more money and getting shot down.
I still can't digest the billion dollar or $2 billion ask. Now granted, there's a lot of information that says that this guy kind of helped build out bail out Softbank from a couple of bad investments they made, including we work and what was the other one I know he had some involvement with Sprint and getting sprint sold off because he was the CEO of Sprint for a little bit before being brought back in and being CEO of the SoftBank Group and then CEO of
SoftBank International. Now, here's the thing is that...I study M&A a little bit. I've never heard anybody getting paid a billion dollars, because their company got acquired. And it's not even his company, right? It's like he was the CEO of a company. Like that would be an incredible buyout, right, some sort of golden parachute, to get a billion dollars like unheard of, kind of golden parachute.
It's put it in perspective, I think the highest I ever heard was Nardelli, when he got fired at Home Depot, and he got paid $280 million, or something along those lines, that was like the highest golden parachute. It would be different if it was his company that he actually owned the company and founded it and built it up, which he actually did do that at some point because he sold his original company to Softbank a few years prior for like $1.6 billion. So...what!?
He's a guy who likes billion dollar deals, Frank? Nothing wrong with that. He's a mover and shaker.
Mover and shaker. I mean, after your first billion right, you know, next billions real easy.
What have you done for me lately? Yeah. It does kind of bring to mind an interesting question regarding compensation in general, and executive compensation, we often think about it in terms of raw figures via dollars, or Yen's, or whatever currency we're working with. But if we think about it, in terms of what percentage of the money that I bring into a company, am I being paid? It sort of changes the
calculus a little bit. Now, it doesn't work as a model for compensation for most jobs, or at least for a lot of jobs, because many jobs, you don't produce any profit, any revenue whatsoever. In fact, you're a cost center, you cost company money, but you're still there for obviously, for a reason. So it wouldn't work that way. But according to this one analysis pushed out by the Associated Press. What he was asking for assuming the $1 billion ask would have been 2.7% Was it of
soft banks? 2021. profit of $46 billion. I think it's a lot of money. It's not quite Apple money, but it's it's a lot of money. When you think of it that way. We don't know how much responsibility Anyone person could possibly have for the revenue that he's claiming responsibility for, but 2.7% of a company's overall profit. That on the surface sounds more reasonable than a billion
dollars. But even then, we this analysis that we this breaking news bulletin that we've just seen, shows a comparison with other successful executives like Tim Cook from Apple D. who just had the most profitable quarter in the history of anything. Earning .07% was it? No, no... .013%? Yeah. So
Here we go...
Bonus money of .0013 of Apple's profitability...I think.
Here's what they have here. "Last year, Apple's board lavished CEO Tim Cook with roughly 95 million in bonuses." And that's because the company turned a profit of $94.7 billion. So he got point 1% of earnings last year for his bonus.
That's almost conveniently almost exactly double, I guess, SoftBanks 46 billion there. So we do kind of have a an interesting point of comparison. He was given 95 million said, which equates roughly to that .0013% and this guy over in Japan, he's not Japanese, but the company's in Japan, asking for 2.7% Are you really worth...what is that, like 200 times what Tim Cook is worth?
You know, and it goes back to me that he didn't found the company. It's not something he'd built up he didn't do anything particularly except getting packaged. For example, with Sprint being sold to T Mobile, he just got the company prepared to sell. I've never heard of an executive making a billion dollars for coming in and turning a company into something that can be prepared to be sold.
Well you haven't heard of it because it hasn't happened.
That's right The second element is that they're also crediting
Yet. him with having turned the WeWork fiasco into something, but when you look at it, they actually had to what was it nine $8.2 billion, they had a write off on that entire thing. Softbank Vision Fund posts a $17.7 billion loss on WeWork and Uber. I mean, granted, he did manage to put WeWork into SPAC and get it to go IPO that way, or basically get traded on the market. But that's a big number. So they might have had to write off $8.2 billion, or 17 point 7
billion. There's I'm seeing a lot of different numbers of write offs here. So is 8.9 billion in 2019 17. Point 7 billion in 2020. Again, he might have come in and salvage something from that, but a billion dollars. Here's what I think. I think, on some level, he kind of thought that he had either an implicit deal, apparently there was some scribbled on a piece of paper agreement between men Masayoshi Son, the CEO of SoftBank.
Masayoshi Son famously showered WeWork with huge sums of money, as those write offs Frank just mentioned would indicate. And I think Marcelo here took what was a gigantic loss and made it a little bit less of a loss. Well, I shouldn't say a little bit, much less of a loss than it would have been otherwise. So I kind of feel like maybe behind the scenes, he said, "Dude, I just helped you, like save some face here. Throw a billion my way, call it even." I think something like that might've
happened. And it wasn't intended to become this big publicized, you know, thing. I think it was sort of a backdoor deal, or at least he thought it was a backdoor deal. And at least he thought it was a deal. Neither of those things, neither backdoor nor a deal.
Yeah, I, I still can't fathom it. You know, they they weren't example that one article uses that Elon Musk got 6.6 billion last year, two years ago. And that's a hard comparison to make because Elon Musk owns a significant chunk of Tesla, for starters.
I think they put that comparison in the article strictly for search engine optimization purposes.
It has to be, right?
Let's name drop Elon Musk. I think that's it.
Yeah. I mean, it just it really does not make a lot of sense. I mean, granted, I'm sure he's worth having $100 million $200 million bonus paid out over a couple of years, maybe stock options, which is what a lot of people get
See now, anchoring effect! Well... One to two-hundred million dollars now seems reasonable. When you're comparing it to a billion.
No, but I mean, if you look at it, like like Tim Cook got a $750 million stock option back in 2011. That's not vested or I thought it was vested after 10 years, I, I could be wrong.
But that's a stock option, that's not cold hard cash.
Right. It's not cash, right. That's a difference. And I think that's what you're going with is that the stock option is different. It's now you have to take it in the year to award it right. So like, they had to pay a lot of money on that tax, or like...
How do you even price that? Like, 750 million in at its current valuation or at its 2011 valuation?
I think it was at its 2011 is when he was taxed, because he had to pay a big tax on that. But nonetheless, it's like, that's, that was one of the biggest awards ever to a non-owner type situation. You know, he's not, he's not found founder, right. I mean, he owned some stock, but not like, you know, sort of everybody right. And I think that's one of those things to look at. Whereas, you know, Elon Musk, while he didn't found Tesla, he did buy into him relatively early and turn them
into who they are. It's a pretty big deal, because when he took over Tesla, they were using load as bodies and putting batteries in electric motors and and turning those into it. And it was kind of cool, but you know, his niche he, and he had the idea of we need to really ramp that up. But again, you look at these folks like Jamie diamonds, another example, Jamie diamond, he gets ridiculously high pay. He's one of the highest compensated CEOs out there.
Again, non founder, non owner, founder and CEO, he just got a massive pay, but he's still less than he's actually less than Tim Cook when you really compare it to the profits. Don't get me wrong. I'm sure the guy deserves a good healthy bonus. But there are times that you have to kind of pump the brakes a little bit. And I think one of these articles touched into something that was quite interesting, right? The idea that because Softbank is a Japanese company,
and tremendous payoff. So this is what the article saying tremendous past executives are not looked kindly upon. So making these huge payments, that also has implications, right? You have to think of the cultural elements of this too. If he were to pay out a huge number like that, how would the stock market react in Japan? How for the Softbank stock? Or how would the other executives react? How would how would the country react? And what, what would the repercussions be for that?
And that's the biggest question I I keep coming back to when it comes to the debate about executive salaries and bonuses is what's the point? We're talking sums of money that you couldn't try to spend in your entire lifetime? Why get yourself into such hot water over? Over this? You don't need the money? Can't use the money? Wouldn't you rather have people like like you and not have the world see you as like a greedy troll like, well, he's
probably a grandiose narcissist or something along those lines. Yeah. But
grandiose narcissist, want people to respect them.
That's true. But they also want people to they also want to be in the news, right? So there might be an element of, he's getting a lot of attention,
status and money or status. Like it's, you know, if we can get him on the show.
And there we go. I keep thinking though. $2 billion, $1 billion. You're right, it's you're never going to spend that money in a lifetime. And not only that, he's also got a non compete, apparently, in his contract. So he couldn't even like poach employees or anything for a few years. But the other element is that they saw one of the articles is that he's going to get a really healthy payout, by leaving and in the magnitude of a couple 100 million or
something like that. So it's not like he's leaving poor.
Now, I don't think he went in for and I don't think he's leaving any worse off than he went in.
I think he's upset. Yeah, I think he's significantly better off. Yeah, yeah. Here. Here's another example. Right? So going back to we work, Adam Newman, who found that company, they pushed him out because, you know, we work with, I mean, that whole fiasco was just insane. There was a whole quote unquote, well, they quote unquote, a tech company or like, you're, you're leasing office space, and temporary type things. There's no tech there.
There's nothing that you can really do in the way they were doing it that was creating that tech company style valuations, right? It just, it was ludicrous. And there's creepy
as hell. Oh, anyone hasn't jumped down that rabbit hole yet. I recommend it.
Well, you can also listen to our cults episode where we kind of Yes, bring that up. It's true. We did. We did so But Adam Newman, they basically paid him $2 billion to get out. However, Adam Newman actually owned the frickin company.
Right. You know, then there's something
you got to compare apples apples, right? I don't know. I it just boggles my mind a little bit. The I mean, you know, there's a way to do this reasonably, if he feels like he, he should have listened to our episode on how you should get a pay raise. Right. And I don't know, the reason why we're doing BREAKING NEWS on this is that this is truly one of those moments of this is next level, this is something that yeah, you kind of get the chaos with Elon Musk getting a $6.6 billion
payout. Or, you know, Larry Ellison, at some point was getting paid out ridiculous money, or Steve Jobs was getting, you know, big money when Disney bought Pixar. And that made him the largest individual shareholder in, in Disney and it was what $7 billion, or something like that? I don't, I don't remember the number. But, you know, again, it's because the guys actually owned and made these things and turned them into what they are, and then got their fruits of
their labors from that. I don't think I've ever heard of an executive being paid that kind of money that they didn't have significant ownership stake or found the company at any point. I mean, this these numbers are just, I mean, Tim Cook got $750 million in options, but that was rolled out over a longevity bonus. It's like you have to stay here and you have to
because it's an option. He has a strike price he has to hit it has to hit a certain valuation, which I would say given that when he received I don't know what the apple valuation was in 2011.
It'll hit the strike price [laughs]. He's well into the money at this point.
Yeah, I was gonna say because what was their valuation? Okay, so their market cap in 2011 Hit 337 billion. So about 10 times today, right? They've almost hit 3 trillion or they take three Charlie did briefly, huh? Okay. 750 million when you create $202.7 trillion evaluation? That's a drop in the bucket.
Not even a rounding error.
I, I can't...I just, I can't
I can't either. In fact, I'm going to take this opportunity to announce my departure from the Busyness Paradox. Frank and I have agreed to a $700 million buyout. See you guys later.
Wohoo! I'm retiring. Take care everybody.
No, you're buying me out.
Oh, dang, I don't, uh...I'll have to pay you out over 700 million years.
70 lifetimes [laughter]
A dollar a year. Oh goodness.
Good day, folks.
Take care.
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