5 ms·

Imagine if I bought "stock" in your job. I monitored your performance and set expectations for your work. You fail to meet those expectations, so as the majorit

Imagine if I bought "stock" in your job. I monitored your performance and set expectations for your work. You fail to meet those expectations, so as the majority shareholder of your job, I have you fired and replaced with someone else. Or you underperform once and I use this threat every single review. That's how Wall Street ruins good business.

refurb 11y ago
I'm not sure I agree with your "bought stock in your job" example. A better analogy would be: - your performance is great - your boss tells you that you'll get a promotion next year if you keep it up - your performance takes a turn for the worse - your boss tells you your performance is worse and lets you know that the promotion next isn't a sure thing The stock market is a market that allows people to buy and sell stock at the price they see fit. The market should reflect all available information. I don't see any reason why LinkedIn's stock shouldn't plummet if suddenly their growth prospects went from "spectacular" to "so-so".
samstave 11y ago
The analogy would likely be better if, rather than firing him, you docked his pay.
mruniverse 11y ago
But it's an aggregation of sentiment, not just one person. And if you feel that sentiment is wrong, there's your chance to make money! Start buying stock in that business at the low price the "fools" have set.
noelsusman 11y ago
It's more like if I decide to pay you $300k because I'm pretty sure you'll do great work. If you then turn in a performance no better than a guy I pay $150k, then I'm going to go "oh shit, I was wrong and should pay you a lot less". The stock market is all about expected future performance. Nobody forces companies to be publicly traded. If you don't want to deal with the expectations game then don't sell shares of your company to outside parties who generally don't care about your actual business.
gknoy 11y ago
Or, worse, you have a Really Damn Good Year, but I ding you at your performance review. Even though you were the best you've ever been, and better than your peers, you weren't quite as good as I was hoping you to be, so ... sorry, no raise this year.
- frivoal 11y ago
  On the other hand, you got the raise at the point where I started hoping you'd do great, even if you hadn't yet.
  - lmm 11y ago
    Maybe. It's really hard to set a fair baseline for a performance bonus; being given stock options struck at the current price is a very similar exercise.
bdcravens 11y ago
Every publicly traded company is subject to the other side of the coin too: their stock price rises based on exceeding analysts' expectations. If you want to be publicly traded, then you have to deal with your performance relative to the public's expectation.

refurb 11y ago

I'm not sure I agree with your "bought stock in your job" example. A better analogy would be: - your performance is great - your boss tells you that you'll get a promotion next year if you keep it up - your performance takes a turn for the worse - your boss tells you your performance is worse and lets you know that the promotion next isn't a sure thing The stock market is a market that allows people to buy and sell stock at the price they see fit. The market should reflect all available information. I don't see any reason why LinkedIn's stock shouldn't plummet if suddenly their growth prospects went from "spectacular" to "so-so".

samstave 11y ago

The analogy would likely be better if, rather than firing him, you docked his pay.

mruniverse 11y ago

But it's an aggregation of sentiment, not just one person. And if you feel that sentiment is wrong, there's your chance to make money! Start buying stock in that business at the low price the "fools" have set.

noelsusman 11y ago

It's more like if I decide to pay you $300k because I'm pretty sure you'll do great work. If you then turn in a performance no better than a guy I pay $150k, then I'm going to go "oh shit, I was wrong and should pay you a lot less". The stock market is all about expected future performance. Nobody forces companies to be publicly traded. If you don't want to deal with the expectations game then don't sell shares of your company to outside parties who generally don't care about your actual business.

gknoy 11y ago

Or, worse, you have a Really Damn Good Year, but I ding you at your performance review. Even though you were the best you've ever been, and better than your peers, you weren't quite as good as I was hoping you to be, so ... sorry, no raise this year.

frivoal 11y ago
On the other hand, you got the raise at the point where I started hoping you'd do great, even if you hadn't yet.
- lmm 11y ago
  Maybe. It's really hard to set a fair baseline for a performance bonus; being given stock options struck at the current price is a very similar exercise.

bdcravens 11y ago

Every publicly traded company is subject to the other side of the coin too: their stock price rises based on exceeding analysts' expectations. If you want to be publicly traded, then you have to deal with your performance relative to the public's expectation.