
Activision CEO Bobby Kotick now one of America’s highest paid executives - shawndumas
http://arstechnica.com/gaming/2013/04/activision-ceo-bobby-kotick-now-one-of-americas-highest-paid-executives/
======
adventured
"Even spreading that stock award out, though, puts Kotick's 2012 compensation
at more than $20 million."

He'd just make the list of the top 20 highest paid baseball players. $20
million is a lot of money, no question about it, and it's a lot of
compensation for any CEO. However, I fail to see why baseball players with so-
so stats should make more than a guy running something worth as much as all of
Major League Baseball combined.

Should they all make a lot less money? Why do I care? If I disagree with
ATVI's compensation policies, I'm free to not own the stock (or even buy their
products). If I don't like how much the Phillies are paying Cliff Lee, I'm
free to never attend their games. And so on and so forth for the rest of the
economic sphere of products and services and companies.

~~~
hkmurakami

      2013 Top MLB Player salaries = ~$20MM
      2013 Average MLB Player salary = $3.4MM [1]
      2012 Minimum MLB Player salary = $480k [2]
    

One could argue that the salary disparity between the top MLB players and the
average player salary (40x) is much smaller than that of the average US
company CEO and employee (300x+).

Of course, we should probably consider the minor league players:

    
    
      Minor League AAA Player Salary range: $5k/mo ~ $25k/mo for a 6 month season [3]
      -> $30k/yr ~ $150k/yr
      
    

(I think signing bonuses and whatnot for top draftees are just outliers)

So if we suppose that a AAA player gets $100k/yr and a top MLB player gets
$20MM/year, then the salary disparity is now 200x, approaching the salary
disparity of US corporate employees and their CEOs. That's actually quite a
striking similarity!

[1] <http://www.cbssports.com/mlb/salaries/avgsalaries>

[2] <http://www.spotrac.com/terms/mlb/mlb-minimum-salary-69/>

[3] [http://www.quora.com/How-much-does-the-average-AAA-
baseball-...](http://www.quora.com/How-much-does-the-average-AAA-baseball-
player-make-in-salary-The-highest-paid-The-lowest)

------
hkmurakami
I did some digging in Oracle's SEC filings and in fiscal 2009, Larry Ellison
(who in FY 2012 was still the highest paid CEO in the country) was given
~$80MM in compensation, where 97% was in "variable compensation" (stock option
grant + performance bonus)

    
    
      Name - Lawrence J. Ellison
    	   	
      Size of Option grant in FY09 (Shares) - 7,000,000
    
      Accounting Grant Date Fair Value of Option Grants in FY09 ($) - 78,421,000
    
      Intrinsic Value of FY09 Option Grants as of 5/29/2009 ($) - 0
    
      Intrinsic Value of FY09 Option Grants as of 8/10/2009 ($) - 3,640,000
    

[http://www.sec.gov/Archives/edgar/data/1341439/0001193125091...](http://www.sec.gov/Archives/edgar/data/1341439/000119312509179868/ddef14a.htm)

The disparity between the intrinsic value of the option grants between May and
August must mean that the shares increased in value by about $.50 in those ~3
months.

I'm always astonished that Ellison still owns ~24% of Oracle.

~~~
adventured
I find his dividend income astonishing: 0.007 * $36 billion ($252 million per
year)

Of course Steve Ballmer does even better: 0.029 * $15 billion ($435 million
per year)

~~~
hkmurakami
Yup, with that kind of cash flow, he can easily absorb the operating losses
from the Lanai island businesses that he purchased a couple of years ago to
reduce his tax exposure X_X

------
jfoutz
At first I found this upsetting. But this is how games are. Good for him. His
mission of taking the fun out of making games is really paying off. There are
small, weird, indie games that can be fun to play, but there's no money in
that. Millions of people play Call of Duty. He's making games tons of people
love and making money doing it.

~~~
adventured
There's no money in Minecraft and Kerbal Space Program and Torchlight and
countless others?

Turns out there's a massive amount of profit to be had in successful indie
games. The distribution channels are spectacular today, from the general Web
to Steam to Amazon to Xbox Live etc.

~~~
rubinelli
But being successful isn't enough. For an indie game, making ten million in
revenue is a dream come true. For Activision, a game with an expected revenue
of 10 million isn't worth the distraction. It's like trying to pitch a CRM for
taxidermists or a Haskel IDE to VC funds: it may be a great idea, but the
market isn't big enough to interest them.

------
tempi35
"The firm's stock price has risen nearly 16-fold during this long tenure..."

I think that sums it up pretty nicely.

------
whatshisface
Why do we care how much money other people make? It seems like an unhealthy
fascination.

~~~
hkmurakami
One reason would be to scrutinize and consider whether top executives deserve
the mammoth compensation that they receive these days. Recall that executive
compensation is at an extreme all time high these days relative to even just 2
decades ago.

~~~
adventured
Executive compensation seems so out of whack because it has kept up with
inflation, while real wages haven't even come close. Why? Allow me to explain.

The S&P 500 now gets half of its profits and sales from the rest of the world.
The boom in countries like Brazil, China, India etc has vastly expanded the
rest of the world's share of the global economy relative to the US. CEO's are
compensated for this performance, but labor is paid based on local / domestic
factors, not the profit generated in foreign markets.

The CEO wage numbers in the US demonstrate how horribly the US economy has
fallen behind when it comes to labor keeping up with global growth. You can
easily test this by scaling the corporate sales backwards, eg to the 1960s,
and adjusting CEO compensation for inflation.

Everybody likes to talk about worker to CEO pay ratios, but what they never
want to talk about is the destruction at the root of the problem: the Fed
destroying the US Dollar. CEO pay has kept up, worker pay has not, and the why
is easy to understand: the US economy is being flushed down the toilet.

By tapping into global growth, multi-nationals have been able to keep up with
the horrific dollar devaluation that has occurred since the 1960s. CEOs are
compensated on that basis. Meanwhile labor directly suffers the full intensity
of the dollar's destruction. It is thus that the American standard of living
has plunged over 50 years. Minimum wage has fallen from $45k to $50k per year
($1.25/hour in 1964, inflation adjusted), down to $14k or so today.

Americans used to be able to more than get by on one income, while a spouse
stayed home to raise a family of four. The savings rate was radically higher
also.

Fundamentally it's the same reason why wealth can survive inflation, but wages
cannot. One can easily be shifted to defensive assets, the other drowns.

Even running just 3% real inflation per year is massively destructive to the
standard of living over the course of a single decade. You have to generate
34% wage increases just to tread water.

------
yekko
Tis only a matter of time till us little people get the same pay package!

