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Many companies aren’t prepared to replace underperforming CEOs

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Re: Many companies aren’t prepared to replace underperforming CEOs

#211

Post by astura »

kibwen wrote: post #128
lovich wrote: post #50

Earlier quoted context omitted.

There’s nothing you can do because the companies are dictatorships or oligarchies at best, not democracies or meritocracies. If he’s the founder presumably he had enough ownership in the company to force the company to keep him in that position. Changing that up requires a radical redesign of how companies are legally constrained in the US or a cultural change that causes an expectation of worker ownership so that th…

Employee-owned companies aren't entirely unheard-of in the US. Legally, they're structured as companies where employees own more than 50% of its shares via an ESOP: https://en.wikipedia.org/wiki/Employee_stock_ownership

I cannot stress this enough - employee-owned companies are still dictatorships, the employees being shareholders doesn't change that at all. Employees get zero, and I mean ZERO, say over day-to-day operations or even major decisions.

The SOLE difference between a non-employee owned company and an employee owned company is who the shareholders are.

Source: personal experience working at multiple employee owned companies

Re: Many companies aren’t prepared to replace underperforming CEOs

#212

Post by lostlogin »

osigurdson wrote: post #210
bluefirebrand wrote: post #175

Earlier quoted context omitted.

I have to wonder if it should be considered a legal conflict of interest for a CEO to sit on the board at all, forget being chairman. The powerful really love rigging stuff in their favor huh

Unfortunately, no organizational structure exists which guarantees optimal outcomes. Everything depends on the actual individuals who occupy the roles. Such structures should ultimately be up to the shareholders.

> no organizational structure exists which guarantees optimal outcomes

I like the structure of bee colonies.

The queen controls the temperament, the workers control the queen and adjust the rate of growth or contraction. Periodically workers replace her with one her of daughters (via regicide).

I'm not sure what the takeaway here is though, as I don't like the idea of a monarchy or of communism.

Re: Many companies aren’t prepared to replace underperforming CEOs

#213

Post by refurb »

indymike wrote: post #126

Many CEOs have very one-sided contracts that makes firing them expensive. A great number of companies have boards that are highly sympathetic to the CEO which makes it take even more effort. In a lot of cases bigger shareholders referred the CEO to the board when they hired the CEO, so the board members that represent that shareholder's interests are invested in the bad CEO. So, you basically end up having to fire a…

Not only that, but changing CEO's has PR risk.

Fire a CEO? Suddenly everyone is going to assume something is really wrong with the company.

Re: Many companies aren’t prepared to replace underperforming CEOs

#214

Post by fijiaarone »

paxys wrote: post #195
Extropy_ wrote: post #194

Earlier quoted context omitted.

Please, excuse me. But, what?! I honestly cannot make out what you're trying to reference.

I'm referring to the money printer that hid most problems plaguing corporate America. Why would shareholders care about mismanagement when their shares were going up 10x regardless?

I think the ??? was about your use of the word “now”

Re: Many companies aren’t prepared to replace underperforming CEOs

#215

Post by codeisawesome »

jandrewrogers wrote: post #120
hypersoar wrote: post #94

I'm thinking of a Jadzia Dax in Star Trek: Deep Space Nine. Jadzia is among the lucky few among her race, the Trill, implanted with a "symbiote" carrying the memories of all of its previous hosts. Carrying a symbiote is an unrealized dream for many Trill who wash out of the rigorous application and training process and are told they're incompatible. In one episode, one such disgruntled fellow tries to steal Jadzia's.…

> Plenty of middle-managers could do as well as the average CEO. I’ve worked with several CEOs and countless senior executives, both at very large companies and small, who had varying degrees of competency. I don’t think this is generally true. Being successful at that job entails a specialized skill set that is rarely evident in middle management. What you are “managing” at the most senior levels of large organizati…

Can you elaborate what those skills are in your view? Meaning no disrespect, your current comment sounds like a hand-wavy opinion with zero actual justification.

Re: Many companies aren’t prepared to replace underperforming CEOs

#216

Post by duud »

jonathankoren wrote: post #86

The implosion of Facebook and Zuck's inability to stave blood loss, and instead bet the company on a niche product line with little interest and even less product should be a emperor's new clothes moment wrt founder stock having 10x voting rights, but I doubt that it will be. The college dropout got lucky with a money printing machine. Not screwing that up, and purchasing every competitor is pretty easy. Now the busi…

How is a company that did $27 billion in revenue last quarter and has 3 billion users imploding? The stock price is down (a similar amount to Netflix,PayPal and other quality companies). There is a difference.

Re: Many companies aren’t prepared to replace underperforming CEOs

#217

Post by jankcorn »

Having had interactions with board members at 2 Fortune500 companies I worked for, I have pretty much lost faith in the "board members reflect the shareholders and manage the executive team" model.

In one case, the board member said that the only material about the company they were ever given was carefully constructed/managed by the CEO/executive team and was not detailed enough to support any critical analysis of executive team decisions.

In all cases, the board members seemed to feel that they were there merely for "helpful advice" rather than "proactive intervention" and the only decision that was clearly in their domain was "replace the CEO", which is pretty grand step.

The directors I have known were all quite competent, sincere people, but knew that their continued presence on the board was predicated on being just a sounding board for the CEO and/or Chairman.

In addition, I was told that, in the US, conflict of interest and other legal liability for directors is now so intricate and severe, that it was no longer possible to hire directors that were competent in the field and not yet fully retired (so hiring directors in the 45-65 age range is impossible, a bit of a problem for high tech!) For those among us who think that steep liability for directors is a good thing, I have a question: would you take that job, when you are just paid a fixed, modest sum for board appearances (perhaps $50-100k/year, total)?

In any case, I don't know how to get "responsibility" and "authority" tightly connected at the top of any modern company. (The only exception I know of is when the company is still run by the founders)

If anyone has ideas, I would love to hear them.

Re: Many companies aren’t prepared to replace underperforming CEOs

#218

Post by colordrops »

bluefirebrand wrote: post #175
DebtDeflation wrote: post #157

Earlier quoted context omitted.

Many corporate boards have an "executive chairman" which means the CEO is also the Chairman of the Board. Perhaps even more importantly a substantial number of board members are executives from other companies, meaning CEOs sit on each others boards and wash each others' backs.

I have to wonder if it should be considered a legal conflict of interest for a CEO to sit on the board at all, forget being chairman. The powerful really love rigging stuff in their favor huh

Boards could have ICs that are voted in by fellow employees.

Re: Many companies aren’t prepared to replace underperforming CEOs

#219

Post by s1artibartfast »

fijiaarone wrote: post #214
paxys wrote: post #195

Earlier quoted context omitted.

I'm referring to the money printer that hid most problems plaguing corporate America. Why would shareholders care about mismanagement when their shares were going up 10x regardless?

I think the ??? was about your use of the word “now”

I think the ideas that the money in printer is broken. now when the tide goes out we will see who is not wearing any bathing suits

Re: Many companies aren’t prepared to replace underperforming CEOs

#220

Post by jollofricepeas »

lostlogin wrote: post #212
osigurdson wrote: post #210

Earlier quoted context omitted.

Unfortunately, no organizational structure exists which guarantees optimal outcomes. Everything depends on the actual individuals who occupy the roles. Such structures should ultimately be up to the shareholders.

> no organizational structure exists which guarantees optimal outcomes I like the structure of bee colonies. The queen controls the temperament, the workers control the queen and adjust the rate of growth or contraction. Periodically workers replace her with one her of daughters (via regicide). I'm not sure what the takeaway here is though, as I don't like the idea of a monarchy or of communism.

Hmm, how insightful.

Let’s dig into this.

- Queen stops producing workers and is replaced by workers (regicide) or replaced by beekeepers (ie. shareholders)

- Bees due to disease or other calamity don’t provide enough honey for their shareholders and they lose their hive and possibly life more than likely

I’d prefer not to lose my life if I don’t produce at work if workers or shareholders aren’t happy

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