Friday, September 28, 2012

Gregg Easterbrook - Is This Really the WORST PLAY?

I usually go through Gregg Easterbrook's Tuesday Morning Quarterback pretty quickly, since most of what he says is anecdotal bullshit.  But occassionally I'll read something he's written about a play I didn't see, and then I'll try to find the play.  It just so happens that this week's "worst play of the season, so far" was easy to find.  I'll let Gregg tell you about it.

Single Worst Play of the Season -- So Far: Michael Vick fumbled near the Arizona goal line on a play that began with six seconds remaining before intermission. James Sanders of the Cardinals recovered and was racing up the sideline. By the time he reached midfield, only two Eagles were even attempting to chase him -- though the clock expired during the play. All Philadelphia had to do was push Sanders out-of-bounds, and the half would have ended without Arizona scoring. Instead nine of 11 Eagles quit on the play, and Arizona got a touchdown.

Philadelphia Eagles offense, you are guilty of the single worst play of the season. So far.

Here is the play (courtesy of The Big Lead).  Go watch it.  Yeah, I'm way to lazy to embed something.

Who, the fuck, was going to catch James Sanders here?  Who had a snowballs chance in hell of pushing him out of bounds?

Easterbrook makes it sounds like 5 guys could have given chase but said..."aww maaaaaan...I don't want to run....that's haaarrrrrd."

When Sanders picks up the ball he is already in front of all but 1 Eagle, and he already running in the direction of the endzone.   Sanders is immediately swarmed by FOUR Cardinals who were running at the fumble and are therefore now running stride for stride with him to block potential tacklers.  In fact, when he is chased down, one of his blockers takes care of clearing his path again.

Receivers and tight ends, as you can imagine, were not close to the ball and were not in a position to react quick enough to do much....though everyone gave chase until it was clear that they had no chance.  Linemen had no hope.

All they had to do was simply push Sanders out of bounds!  Well, they actually needed to (mostly likely) change direction, make up 10-20 or so yards, run down a pretty fast guy, and get by his blockers and catch up to him, and push him out of bounds. 

Friday, September 14, 2012

Gregg Easterbrook: You Owe Ed Liddy an Apology

Chances are you've read this post (like 200 times) from a few years ago where Gregg Easterbook expresses outrage at Ed Liddy's "kings ransom" like compensation package that he and AIG LIED about.  Well the wait is over, because now we have the exciting conclusion to this story.

While looking up Apple's proxy for the last post, I remembered the old AIG post and I thought it was a good time to do a follow up. 

For reference, Gregg took issue with AIG paying certain of Liddy's living expenses - calling it out as being essentially the same as base compensation.  See, Liddy lived in Chicago, and he was asked to step in as CEO during an insanely turbulent time (remember that financial crisis thing?  No?  Remember Bear Stearns and Lehman Brothers?  Riiiighhht....that crisis).  They structured his compensation as $1 salary, he declined   stock options, and AIG would pay certain living expenses for him in NYC since he already was paying for ongoing living expenses in Chicago. Sounds reasonable, right?  The intent, as disclosed by AIG, was to make it so that Liddy wasn't paying to work for AIG.  What did Easterbrook say about Liddy's $1 a year salary and zero stock options?

Yet he lied through his teeth about this and got away with it.

Sure.  He said that the living expenses WERE salary and said that zero stock options was actually 200,000 stock options, based on what a different CEO was given.  Kind of a jerky thing to do, right?

What does this encourage? More CEO lying. Liddy also received stock options. AIG has never said how many; suppose it was 200,000, the number just granted Benmosche.  When Liddy went to AIG, its share price was hovering around $5; if that's the strike price, 200,000 shares would be worth about $7 million right now. Plus AIG quietly said Liddy may receive a bonus payable in 2010. The man who was widely praised for claiming to work for $1 may end up with a king's ransom in his pockets, all pilfered from the average taxpayers. Why have the media dropped this story?

At the time, I took issue with Easterbrook's hypothetical stock option grant and $7 million gain being passed off as if it was in Liddy's bank account.  AIG specifically disclosed that Liddy turned down an option award, and Easterbrook still told you the opposite. 

I checked AIG's proxy for 2009 here.  What did I find?

Final tally of options granted to Ed Liddy during his tenure at AIG: 0 shares
Restricted Stock awarded Ed Liddy: 0 shares
Gain on exercise of stock: $0
Gain assumed by Easterbrook in calling Liddy a liar: $7 million
Amount Easterbrook was off by: $7 million
% Easterbrook was of by: 100%
Bonus paid to Ed Liddy: $0

Why did the media drop the story?  There was no story.  You made up the story.

So Easterbrook frequently rails on the New York times for making mistakes in their reporting, but not issuing corrections with the same level of prominance. 

Where was his correction?   Since he insulted someone's integrity - where was his apology? 

Monday, September 10, 2012

Gregg Easterbrook Distorts Tim Cook's CEO Restricted Stock Award

Ahhh the NFL season is upon us, which means that Gregg Easterbrook has his forum on ESPN to write misleading half-truths and totally point out when people prepare for Christmas too soon.

Anyway, a couple of weeks ago, Easterbrook took issue with Apple CEO Tim Cook's compensation.  Let's see if he played it straight, or if he was misleading (he was misleading).

Is Apple the New Exxon/Mobil?

Timothy Cook, CEO of Apple, received $378 million in compensation for 2011.

Well, that’s clearly a lot of money – imagine if your compensation was $377,996,537 of cold, hard cash – all of it “received” in 2011.  Pretty crazy!  Now, what if I told you that $376,180,000 of that compensation would be paid in stock? Does that change your opinion? Maybe not. Sell stock, convert to cash. Couldn’t be more simple, right? What if I told you that 50% of that stock (500,000 shares) wouldn’t be yours unless you’ve been successful at your job for 5 years (your job requires you to maintain Apple’s impossibly high growth rates and market share). You may reply, “okay, but I get the other 500,000 shares now?” No – you get the other 500,000 shares in 10 years.   A bit of a catch.  So what Gregg has done is he's latched onto the proxy compensation reported by Apple.  Not wrong, but horribly misleading.  Usually, it's a good proxy (see what I did there) for annual compensation.  But when I saw Gregg's note, I knew it was impossibly high, and quick control-f in the proxy would tell the real story.  Let's see...

This is appalling avarice: Cook could have paid himself half as much and still been the highest-paid CEO in the United States! Cook pulled down $126,000 per hour, more per hour than the typical American family makes in a year.

Does my above paragraph change your view on whether or not Tim Cook “PAID HIMSELF” $378 million in 2011? The board paid him $900,000 of salary, a $900,000 bonus and gave him 1,000,000 shares of stock, vesting 50% in 5 years and 50% in 10 years.

But how could I possibly know this information, and why the board decided to give him that award? Well, maybe we could read the public filing?

In connection with Mr. Cook’s appointment as CEO, the Board granted Mr. Cook 1,000,000 RSUs as a promotion and retention award. The RSUs are payable, subject to vesting, on a one-for-one basis in shares of the Company’s common stock. Fifty percent (50%) of Mr. Cook’s award is scheduled to vest on August 24, 2016 (five years after the award date) and fifty percent (50%) of Mr. Cook’s award is scheduled to vest on August 24, 2021 (ten years after the award date), subject to Mr. Cook’s continued employment with the Company through the applicable vesting date. In light of Mr. Cook’s experience with the Company, including his leadership during Mr. Jobs’s prior leaves of absence, the Board views his retention as CEO as critical to the Company’s success and smooth leadership transition. The RSU award is intended as a long-term retention incentive for Mr. Cook, and, accordingly, should be viewed as compensation over the 10-year vesting period and not solely as compensation for 2011.

Interesting, what else?

Except for the longer 10-year vesting term, Mr. Cook’s award is subject to the same standard terms and conditions that apply to the Company’s RSU awards generally. Accordingly, the award provides that Mr. Cook’s unvested RSUs will be forfeited if his employment terminates in any circumstances, other than death or disability.

Sounds like a nice gig, 500,000 shares of Apple in 5 years, and another 500,000 in 10 years. All you have to do it is keep cranking out world class performance as the CEO of Apple and making your shareholders richer and richer. Sounds easy enough.

Recently The Wall Street Journal reported that Hon Hai Precision Industry, manufacturer of the iPad, pays workers about $345 per month. So if Cook had merely taken half as much, the money saved could have been used to double the wages of 46,000 Chinese workers. So which is more important, a better life for 46,000 people or greed for Apple's CEO?

There was no money to do anything with. You either didn’t read the filing (lazy) or you did and you’re being intentionally misleading to your readers (asshole).

Workers in China are not the sole issue. Apple's U.S. retail workers are much more productive than Costco or Best Buy workers, yet earn significantly less. Cook might say his extremely high pay is based on his being productive. But Apple's U.S. employees are productive, and are shafted on pay.

I have two counter points: Apple products are easy to sell (high demand, despite high prices), and you don’t make money in retail sales.

Also, nowhere in that article does it say that Apple employees earn less than counterparts at Best Buy and Costco.   Though I didn't read the whole thing, I did some word finds.

Cook would probably say that his extremely high pay is based on Apple designing and manufacturing expensive products at a low cost that fly off of retail shelves.

Apple products are cool and offer value. But when the social equation is taken into account, Apple becomes disturbing. How did this happen to what was once a progressive firm?

Apple becomes disturbing when you cherry pick information and ignore material facts.