231–240 of 263 posts
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What is the difference in your mind between maximizing share price and "increase the value of the company"?
Why do you equate the intrinsic value of a company directly to its share price?
It’s interesting to me this doesn’t self correct. I’d love to know if someone can explain why. E.g. presumably companies can pay people more if they capture less value themselves. Why can’t a company do that and just hire the best talent?
Maybe this is the self correction. Consider the various CEOs of Apple. Some drove it to near bankruptcy, Jobs drove it to the richest company in the world. Same company, same employees. The only difference was leadership. Consider also what happened to MSFT when Nadella took over. Same company, same employees, dramatically different results. As a shareholder of Microsoft and Apple, I am happy with their CEO compensat…
That's quite the leap though, and is just confusing correlation and causation. Maybe the previous leadership was simply getting in the way of the engineers and managers that had the good ideas. And the new leadership was more hands-off, or focused in other areas like marketing. Or those cases are just flukes. For every case like the ones you cite, I could find two where the exact opposite happened.
If you're downing a shot of vodka every morning, and suddenly stop, then yeah, your health is going to improve.
In my opinion, many (if not most) of these CEOs are business-focused people with no technical (or even non-technical) knowledge of anything they purport to manage. And on the whole, they really don't affect the value of the company one way or the other.
I'm not sure how to phrase this, so please be patient and try to understand what I intend to say. CEO pay relative to median employee pay has soared since the 1970s. That is, a CEO may be paid $10,000,000 vs the median employee at $70,000 (arbitrary numbers), where before 1970 the numbers may have been $150,000 and $20,000 Using only one set of numbers can be deceiving though. For instance, through mergers and acquis…
Is revenue per employee the best metric? Productivity gains don’t automatically justify higher executive pay. Most of those gains come from technology the CEO didn't invent or personally implement, supply-chain leverage, and cost-cutting at the bottom, not from some surge of genius at the top. Yet the financial rewards are heavily skewed upward, while median wages flatlined. Plus you know the rule about what you measure being what you get more of. All that would happens under your metric is CEOs push to move to 'contractors' to reduce the measured headcount to justify an even higher salary.
Changing the metric just masks things. Society is broken for those at the bottom, and if their numbers grow too large, it will become broken for everyone.
It’s interesting to me this doesn’t self correct. I’d love to know if someone can explain why. E.g. presumably companies can pay people more if they capture less value themselves. Why can’t a company do that and just hire the best talent?
Maybe this is the self correction. Consider the various CEOs of Apple. Some drove it to near bankruptcy, Jobs drove it to the richest company in the world. Same company, same employees. The only difference was leadership. Consider also what happened to MSFT when Nadella took over. Same company, same employees, dramatically different results. As a shareholder of Microsoft and Apple, I am happy with their CEO compensat…
Not really. There are a lot of external factors that could explain the difference in the company's performance. Different time, different customers, different overall market strength, different availability in capital, different interest rates. You can't pin the company's success or failure entirely on the CEO, and there is not that much correlation between CEO compensation and company success.
I think a lot of people could do Nadella’s job and you’d see similar company performance. In fact I’d be so bold to say that the higher up on the totem pole you go, the more people could do an equal or better job. The world has few CEOs simply because the world has few companies, not because the job is particularly difficult or requires niche, rare skill.
We love to hero worship, though, and the fiction we consume loves to uplift That One Person who won the day, downplaying everyone else who contributed to that win, and the environment in which the win happened.
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> Sure, bids hitting the orderbook theoretically keeps a stock price higher QED: manipulation > failing companies can keep their stock price high over the long term with buybacks This assumes they care about the long term.
Am I manipulating a stock when I place a limit buy order? I don't even publicly announce it months beforehand like corporations do.
Maybe executives shouldn't have stock. Then it wouldn't be manipulation.
But they do. That is their main compensation people like to point (the CEO isn't really getting paid those millions, it's stocks). So the CEO is paid in a way that encourage the CEO to commit DIRECT stock manipulation.
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Now, this painter works for your house exclusively every day 40 to 60 hours each week total, 2-5 years, and because of their work you sell house for 1,000x of the original price. You now go to live luxury life without need to ever work again, while painter continue their meager life painting another house 8 hours every day.
I would say that is a pretty dumb painter. Definitely wildly talented at painting, but incredibly unintelligent. Just paint the house like you were paid to. You might think I was making an analogy, and hence tried to break it, but it wasn't an analogy. Its the same thing. You own something, you pay people to work on it, it's still all yours afterwards.
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I think the role of government is limited to that of protecting constitutional rights of citizens. People in impoverished countries live with extended family and share income and get along just fine. We shouldn't violate rights of individuals to facilitate a welfare program. That should be handled by families, communities, religious institutions, etc.
That is your opinion. The role of government should be whatever the citizens decide through democratic processes. If they want the government to go around feeding people from milk bottles, that is what it will be. If they decide it is to run the fight club that decides who eats and who dies, that will be its role. Americans have decided that the role of government is going to be closer to the second than the first, a…
These truths are not self evident to other cultures. Like yours
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Is part of the performance keeping worker wages as low as possible?
No. If keeping worker wages as low as possible was the goal, they wouldn't award stock or healthcare benefits to part time workers in their kitchens. The point is that poaching a new CEO from another company (in this case, Chipotle), and awarding him a pile of stock options if he hits certain metrics is not pay, is not comparable to W2 income, does not hit his bank account, and does not make anyone else poorer, excep…
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I would say that is a pretty dumb painter. Definitely wildly talented at painting, but incredibly unintelligent. Just paint the house like you were paid to. You might think I was making an analogy, and hence tried to break it, but it wasn't an analogy. Its the same thing. You own something, you pay people to work on it, it's still all yours afterwards.
Telling the majority of our population they are dumb for engaging in our current social contract isn't going to work out well for society long term.
Those are probably less than 1% of the population. The majority don't even approach 2x, much less 1000x.
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That is your opinion. The role of government should be whatever the citizens decide through democratic processes. If they want the government to go around feeding people from milk bottles, that is what it will be. If they decide it is to run the fight club that decides who eats and who dies, that will be its role. Americans have decided that the role of government is going to be closer to the second than the first, a…
Yeah it's the opinion of the western world. "We hold these truths to be self evident" is the preamble. These truths are not self evident to other cultures. Like yours