81–90 of 191 posts
I find some irony in that the frequently stated mission of the LTSE is, well, long term thinking, and yet the most recent Dec 7 medium post is about how excited they are to be accelerating their launch by pairing with an existent platform.
How is a post that talks about a seven year project not long term enough for you?
While it's certainly a popular belief... from my understanding it's not at all proven, or even obvious, that stock markets encourage short-term thinking over long-term.
Indeed, theory would suggest the contrary: the value of a stock is the discounted entire future cash flow, which means the stock market should be focused on the long-term more than anybody else.
While managers, on the other hand, may only be around for a few years, and one could argue they have every incentive to pump the price of the stock as high as it can go in the short term, to maximize the value of their options -- to the detriment of long-term value.
Anecdotes are easy to find on both sides. But ask yourself which is more likely -- that investors are dumb and managers are smart and investors should just trust managers to do the right thing? Or that investors are smart and need to hold managers accountable because it's the investors' own money at stake, while managers are smart too but always want a longer leash to do their own thing regardless of whether it's good for the company as a whole (e.g. spend more resources on cool side projects)?
E.g. see https://www.ft.com/content/23fd921e-3b75-11e5-bbd1-b37bc06f5...
"Tenured shareholder voting power, meaning that a shareholder’s votes would be proportionately weighted by the length of time the shares have been held" I wonder if we're going to see the rise of holding companies just to get around this rule. "Our holding company owns shares in XYZ, and will never sell those shares ever. Instead of buying/selling XYZ directly, you can instead buy/sell shares in our holding company.…
Individual beneficial ownership as a criterium would widen your definition only somewhat. Plus you could give corporate shareholders non-voting shares I guess.
> The LTSE is designed to remove the short-term pressures that plague today’s public markets and reorient companies and investors around long-term thinking. While it's certainly a popular belief... from my understanding it's not at all proven , or even obvious, that stock markets encourage short-term thinking over long-term. Indeed, theory would suggest the contrary: the value of a stock is the discounted entire futu…
Earlier quoted context omitted.
Your concern is only the tip of the iceberg. Any set of rules will be gamed. The only way I can think of (and it can probably be gamed) that would really put the long term into the executives mind is to have most of their compensation based on the value of the company a few years after they're done. But given the existence of options and shorting stocks and any number of ways to mitigate risk or make money that don't…
I read somewhere about splitting control and ownership, but really you can’t. You either own a thing or you don’t. Time shares notwithstanding. I do like dividend paying stock, but is that not a form of short term thinking? “May me my dividend this quarter, I don’t care when happens next year!”
Earlier quoted context omitted.
Your concern is only the tip of the iceberg. Any set of rules will be gamed. The only way I can think of (and it can probably be gamed) that would really put the long term into the executives mind is to have most of their compensation based on the value of the company a few years after they're done. But given the existence of options and shorting stocks and any number of ways to mitigate risk or make money that don't…
I read somewhere about splitting control and ownership, but really you can’t. You either own a thing or you don’t. Time shares notwithstanding. I do like dividend paying stock, but is that not a form of short term thinking? “May me my dividend this quarter, I don’t care when happens next year!”
Earlier quoted context omitted.
Nowhere near a lawyer here, but: Would it be possible to contractually obligate any entities holding these stocks to also adopt tenured shareholder voting power? Doing so would certainly improve the loophole situation, though I suspect it doesn't fix it entirely... Things probably get weird when you nest tenure effects.
I don’t see how that could work generally . Sure, it might be possible to enforce by-laws when making a sale/purchase (but extra obligations would inevitably drive down the sale price), but what of situations in which collateral shares are foreclosed upon, they are inherited, or other non-voluntary transfers of ownership? What if one day they ended up even temporarily in the hands of a government (for example, the It…
Would it be legal to simply grant extra rights to owners who adhere to the LTSE's rules? Ie, one share carries 1 'point' of voting power, unless the owner is an individual or an entity which adheres to the LTSE rules, in which case the share carries 1 + kt points of voting power.
If an entity outside the LTSE holds some shares, that's fine. They just extract very little value from them compared to an entity within the LTSE, increasing the value of all other shares outstanding and creating a strong incentive for that entity to sell back into LTSE.
Actually, I expect them to give birth to a few amazing unicorns (not value wise but in terms of innovation), but at the same time it will take some time before there will be any visible results.
"Tenured shareholder voting power, meaning that a shareholder’s votes would be proportionately weighted by the length of time the shares have been held" I wonder if we're going to see the rise of holding companies just to get around this rule. "Our holding company owns shares in XYZ, and will never sell those shares ever. Instead of buying/selling XYZ directly, you can instead buy/sell shares in our holding company.…
Your concern is only the tip of the iceberg. Any set of rules will be gamed. The only way I can think of (and it can probably be gamed) that would really put the long term into the executives mind is to have most of their compensation based on the value of the company a few years after they're done. But given the existence of options and shorting stocks and any number of ways to mitigate risk or make money that don't…
Hopefully this was a very fleeting thought; when it comes to ideas about changing corporate structure you couldn't really come up with a worse one. It is a complete violation of the skin-in-the-game principle that has so successfully propelled capitalist society for more than 200 years.
If management aren't accountable to the wishes of people who have proven they can preserve or grow piles of money, there will be economic waste on a colossal scale compared to what we have now. Corporate management would be overwhelmed by fast talking con men.
Turn your attention instead to the forces that are making short term decisions the better ones. I'm no expert, but if short-term thinking has been going on for a long-term time then something is more fundamentally wrong than "gee, people with money must just be stupid!". People don't seem to like accepting quite how rationally intelligent markets are - the only thing markets have been shown not to do well is make sacrifices for moral reasons.