Clickbait headline misstates GoPro compensation.
Mashable published an article by its Senior Business Reporter with the breathless headline “GoPro’s CEO makes $284 million a year. That’s four times as much money as Apple’s Tim Cook.“ It tries to discuss the social consequences of executive compensation and CEO/employee inequity and CEO-CEO inequity. Someone makes more money than Tim Cook! OMG! ONOZ!
Mashable claims that “So perhaps it shouldn’t come as much of a surprise that GoPro would pay pretty much any amount of money to ensure that the CEO is happy and engaged.” Let’s take a look.
Woodman received 4.5 million restricted stock units worth $284.5 million as of the end of 2014, earning him the title of highest paid CEO in the U.S., according to the new Bloomberg Pay Index.
That sounds official and mathematical. Is it true?
Here is how that grant worked. Woodman got the grant in June 2014. GoPro did not hand him a $284.5 million wad of cash. It handed him shares as part of an employment contract, of which only 1.5 million were actually his at the time (still a lot, but not nearly what Mashable claimed). He can get the rest, but only if the stock price hits its targets and he continues working there. The price targets are $34.03/share and $44.24/share. That would be 42% and 84%, respectively, higher than the $24/share IPO price.
It was a rich deal for the founder and key employee of what became a very valuable company ($5.9 billion market cap as of this writing). Some people may refer to this “aligning management’s interests with those of the shareholders.” Nobody would honestly say he “makes $284 million a year.”