One CEO who surely wasn't paid too much

If a CEO were paid more than he was worth, share prices should be expected to rise after he is removed. Well, Apple's shares have "tumbled" after Jobs has announced his decision to go on leave. If the CEO was paid as much as he was worth, the stock price would stay the same. Of course the problem is a little more complicated than that because it is also a question of who the alternative is, but some would have you believe that entrenched incumbents are getting the biggest premium so one should expect stock prices to rise on average. MarketWatch has the story here:

Apple Inc. shares dropped as much as 10% Wednesday evening after the technology company said that Chief Executive Steve Jobs will take a medical leave of absence until the end of June.
Apple (AAPL: 85.33, -2.38, -2.7%) shares were last down 7.6% to $78.80. They finished the regular-session at $85.30.
Jobs, in a statement, said that during the past week he's learned that his health-related issues "are more complex than I originally thought."
Chief Operating Officer Tim Cook will be responsible for day to day operations.

"Unfortunately, the curiosity over my personal health continues to be a distraction not only for me and my family, but everyone else at Apple as well," said Jobs.



Blogger Unknown said...

It's a little more complex than this, given that to many people Jobs = Apple. Jobs founded Apple, was forced out, and then came back several years later to rescue it.

Jobs is considered by some to be pretty much the sole source of Apple's recent success.

If he leaves permanently, or dies, stockholders expect that Apple will not be as successful, and shares would be worth less.

But, then, I'm just a 22 year-old who doesn't really like most modern economic theory anyway.

1/20/2009 7:15 AM  

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