Seems like they could just do a 15 year annuity that did X times the market avg price every two weeks. Make it transferable so CEOs could liquidate some for higher up front salary.
The MBA Myth and the Cult of the CEO
141–150 of 164 posts
Re: The MBA Myth and the Cult of the CEO
#142[deleted]
Re: The MBA Myth and the Cult of the CEO
#143Earlier quoted context omitted.
"I try to invest in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will." --Warren Buffett
I think the quote is by Peter Lynch from the book - One Up on Wall Street.
Perhaps, though Googling the quote has SERPs more than 25:1 in favor of Buffett as origin.
Re: The MBA Myth and the Cult of the CEO
#144Earlier quoted context omitted.
Athletes and entertainers being paid insane amounts isn’t as new as you might think, although fashions do wax and wane. https://en.m.wikipedia.org/wiki/Gaius_Appuleius_Diocles Gaius Appuleius Diocles was born in approximately 104 A.D in Lamecum... Diocles is believed to have started racing at the age of 18 in Ilerda... Records show that he won 1,462 out of the 4,257 four-horse races he competed in and was placed in a…
Records show that he won 1,462 out of the 4,257 four-horse races he competed in and was placed in an additional 1,438 races (mostly finishing in second place). >Many of his victories took the form of a ‘come from behind’ crossing of the finish line at the last possible moment. The crowds loved it. What a wonderful story. The fact that he frequently finished in second place makes me think he was often trying to pull o…
I can see how being instrumental in creating an exciting and tight race might be more lucrative than merely winning all the time. At least when the main source of revenue is spectators rather than sponsorship.
Re: The MBA Myth and the Cult of the CEO
#145Earlier quoted context omitted.
We don't need Presidents and Popes either. The world is a much more complicated place today, than during the time of kings, and the accumulating data is going to keep revealing the complexity is too much for one man or woman to be responsible for it all. But when a Deepwater Horizon type event happens and the whole herd starts baying for blood, are we sophisticated enough to say hey look at the data whats the point o…
Neither the President nor the Pope have a considerable amount of power. The office of the pres. was specifically designed to 'not be a king' and he's highly constrained by the other wings of government. The US was supposed to mostly about the states. The Catholic Church generally gives a very wide berth as to the operational artifacts of Parishes. He's also to some extent a figurehead. CEO means such different things…
> Neither the President nor the Pope have a considerable amount of power.
Depends on which president you're talking about. The presidents of France and the US have a lot of power, the president of Germany has practically none. Monarchs in modern democracies often have less power than the German president.
And while presidents are highly constrained by other branches of the government, many pre-democracy kings didn't have any sort of absolute power either. Ultimately of course, any ruler can only rule with the consent of the people he rules; the real difference is to what extent those limitations are formalised in a law, like the US Constitution or the Magna Carta, and how far those limitations go.
In many companies, both the real source of a CEO's power and the real restrictions on his power come from outside the company, not from other employees of that company. The outside law supports the CEO's right to dictate how the company will be run, but also limits how much he can oppress or exploit his workers.
Re: The MBA Myth and the Cult of the CEO
#146This is great work. It's a real job gathering and analysing all that CEO performance data. My guess is that most people were suspecting this anyway. The fact is the CEO is there for a few years making a few key decisions, a large company is like an oil tanker, and markets are quite hard to predict. Taleb has cooked a fair bit of soup on the fooled by randomness idea, but in this case his observations are correct. It…
> I don't think anyone is surprised that it doesn't help at all. I know you're purposely being sensationalist, but there is pretty incredible value in the networking by doing an MBA...which IMHO is actually what makes good CEOs - having strong networks of people around you.
Right, clearly this makes strongly networked CEO, but not a "good" CEO in terms of subsequent period share returns, as the research demonstrates.
Re: The MBA Myth and the Cult of the CEO
#147One of the best things to come out of so-called “big data” is the slow destruction of the human ego. I read an interesting joke few months back (not sure where, might have been in Capital Minded), the gist of it was basically: If 99% of people who buy corporations for a living can't beat a monkey throwing darts over time...why do we believe people who run corporations for a living are any smarter? They're both lookin…
> If 99% of people who buy corporations for a living can't beat a monkey throwing darts over time...
They're not "buying corporations", they're gambling. As such, their success rate is about the same as in other forms of gambling.
Re: The MBA Myth and the Cult of the CEO
#148Earlier quoted context omitted.
Warren Buffet famously says he likes to invest in businesses that could be run by a ham sandwich.
"I try to invest in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will." --Warren Buffett
Whether the quote is by Buffet or not, I really wish I could be so "idiotic" as to get paid tens of millions of dollars a year as a CEO.
Just one year would be enough, actually.
Re: The MBA Myth and the Cult of the CEO
#149The design is interesting but the test itself is kinda pointless. Fama-French explains about 30% of stock return variation at best so by using stock performance as a measurement you are mostly testing signal (highly credited CEOs) against noise (residual returns).
Another thing is you have to specify your position on EMH here. If you believe the semi-strong form then everything about the CEO should be priced-in immediately after the announcement, which means it will not have a persistent impact on stock return when you slice and dice time periods.
IMO the CEO is just one input out of thousands that influence a stock's performance, which is implied by a lot of asset pricing studies already.
Also managing a public company is an unbelievably complicated job. You have to be one of the "best and the brightest" just to keep the boat bearly afloat sometimes.
Re: The MBA Myth and the Cult of the CEO
#150I love to hate on MBA types just as much as the next engineer, but this article contains a distracting logical fallacy right away: That CEO pay increased because of a trend in aligning incentives (the analysis of the CEOs performance says nothing about this). The article spends no time on this and is at best an ancillary point, it should have started with a general statement of how crazy CEO pay is and if it’s worth…
But this was the justification in countless think pieces in the Economist, the NYT, and so on. Align the incentives of the CEO with the shareholders and magic will occur. The author is dueling with a ghost that you never saw.