‘Zuck reportedly spent $200 million hiring the former head of AI research at Apple — triple Tim Cook’s salary. Apple didn’t match it, so he just hired him.

The thing to remember is most people think about this in dollar terms because that’s how the media reports it. In reality, you should think about it in dilution terms.

When hiring a senior executive, there are three ways to think about compensation: 1. Relative to their alternatives – What would they get elsewhere? In this case, Daniel Gross was running a successful venture fund and building a company with Ilya. You have to outbid those options. 2. Relative to peers in the company – Keeping balance here is hard. Zuckerberg clearly threw this out the window, which could cause issues when other executives expect similar refresh packages. 3. Marginal impact on the business – This is the real test. If I buy a company — say, Superhuman — I ask: “Does this increase the company’s value by at least the percentage of equity I’m giving up?” If yes, it’s worth it. The same applies to hires.

For example, if hiring someone costs 1% of the company, the question is: will they increase our chance of success by at least 1%? $100 million sounds huge to us because we compare it to executive salaries, but for Meta, the total of all these hires might be just 0.1% of market cap. If I were on the board and thought this increased success probability by 0.1%, I’d approve it.

The twist is Zuckerberg made these moves publicly and raised the bar for every other company. Still, from a purely mathematical perspective, it’s not crazy.

Unlike my acquisition of Superhuman, where we’ll only know results years later, Meta’s moves are judged instantly by the public markets. But even if the stock moved 0.1% on news of these hires, no one would notice — it fluctuates that much daily. In essence, Zuckerberg acquired talent the way you’d acquire a company.

He’s acting like a founder focused on long-term value, not short-term judgment. That mindset — thinking in years, not weeks — is what founder-like leaders do. Some bets will work, others won’t, but with a trillion-dollar market cap, you’re wasting potential if you don’t make big bets.’

Source: Shishir Mehrotra’s frameowork on exec salary.