6 ms·

It is hard to move the ball forward when you reorg every year and have minor layoffs almost every year to keep OIBDA moving in the right direction so the execs

It is hard to move the ball forward when you reorg every year and have minor layoffs almost every year to keep OIBDA moving in the right direction so the execs get larger bonuses. So many people were in self preservation mode with no interest in anything that was "risky" and might put their bonus at risk. Similar things happened with how they managed MapQuest. Also, if you think they missed a chance on AIM, it is nothing compared to what they missed on email. They could easily have made aol mail free and still kept charging for the client. Ted Leonsis admitted at a meeting once that this was his largest regret.

sgift 9y ago
> It is hard to move the ball forward when you reorg every year and have minor layoffs almost every year to keep OIBDA moving in the right direction so the execs get larger bonuses. Is there a an established term for this already? If not I'd like to call it stock market disease due to the usual reason for it.
- chiefalchemist 9y ago
  Wall Streetitis?
- amptorn 9y ago
  "Capitalism"
  - Ibethewalrus 9y ago
    Capitalism will eat itself
- azernik 9y ago
  Quarterly Capitalism.
- wallace_f 9y ago
  Executive compensation often comes in the form of equity, but are there cases where execs are obligated to hold the equity over a long time horizon? Say 10-20 years? That seems it would align incentives better for everyone, no?
  - JauntTrooper 9y ago
    There are some. Exxon's performance shares vest 50% over 5 years and 50% in retirement, with a 10 year minimum. One of the problems with this approach is in order to get executives to forgo their compensation for that many years you often have to pay them more, which gets into pay magnitude concerns. Norway's sovereign wealth fund Norges is starting to encourage companies to adopt very long term time horizons for equity awards and to move away from the specific, complex performance-vesting plans most US companies rely on today, though most institutional investors and companies are skeptical of that approach.
    - wallace_f 9y ago
      >One of the problems with this approach is in order to get executives to forgo their compensation for that many years you often have to pay them more, which gets into pay magnitude concerns. That is logical; however afaik there is almost no data to indicate magnitude of CEO pay is an indicator of company performance. I would bet you that long-horizon-tied CEO compensation would be correlated, though.
menerva 9y ago
so isn't this capitalism working as it should? they literally killed their own golden goose with stupidity. why shouldn't others disrupt corrupt crap business?
- jtmarl1n 9y ago
  He isn't saying others shouldn't come along to replace them. Only that the AOL people realized their mistakes too late.
  - snarf21 9y ago
    Mostly this, or that they didn't even really care. It was all about preservation and riding out the gravy train.
- SapphireSun 9y ago
  It's a strange feature of an economic system where the incentives require that successful participants blow themselves up. It requires that new=good and old=bad.
  - ImSkeptical 9y ago
    It's not required that successful businesses blow themselves up, but if they do make poor choices, they will suffer, and perhaps pay with their existence, for those choices.
    - chiefalchemist 9y ago
      It's not required. But just the same it should always be a what-if possibility. I'd say the poor choices come from a tunnel vision approach to those decisions. Ultimately, in the context ans scope they are made, they are probably great decisions. However, reality is more far reaching.
  - abakker 9y ago
    In technology especially, inertia is a liability. Not really surprising that most tech companies don't make it that long. What is more surprising is that our attachment to institutions includes for-profit businesses. Really, we should, as customers/consumers, just go with the best service, but culturally we can't help but think that something is lost when an old, useless company goes away.

sgift 9y ago

> It is hard to move the ball forward when you reorg every year and have minor layoffs almost every year to keep OIBDA moving in the right direction so the execs get larger bonuses. Is there a an established term for this already? If not I'd like to call it stock market disease due to the usual reason for it.

chiefalchemist 9y ago
Wall Streetitis?
amptorn 9y ago
"Capitalism"
- Ibethewalrus 9y ago
  Capitalism will eat itself
azernik 9y ago
Quarterly Capitalism.
wallace_f 9y ago
Executive compensation often comes in the form of equity, but are there cases where execs are obligated to hold the equity over a long time horizon? Say 10-20 years? That seems it would align incentives better for everyone, no?
- JauntTrooper 9y ago
  There are some. Exxon's performance shares vest 50% over 5 years and 50% in retirement, with a 10 year minimum. One of the problems with this approach is in order to get executives to forgo their compensation for that many years you often have to pay them more, which gets into pay magnitude concerns. Norway's sovereign wealth fund Norges is starting to encourage companies to adopt very long term time horizons for equity awards and to move away from the specific, complex performance-vesting plans most US companies rely on today, though most institutional investors and companies are skeptical of that approach.
  - wallace_f 9y ago
    >One of the problems with this approach is in order to get executives to forgo their compensation for that many years you often have to pay them more, which gets into pay magnitude concerns. That is logical; however afaik there is almost no data to indicate magnitude of CEO pay is an indicator of company performance. I would bet you that long-horizon-tied CEO compensation would be correlated, though.

menerva 9y ago

so isn't this capitalism working as it should? they literally killed their own golden goose with stupidity. why shouldn't others disrupt corrupt crap business?

jtmarl1n 9y ago
He isn't saying others shouldn't come along to replace them. Only that the AOL people realized their mistakes too late.
- snarf21 9y ago
  Mostly this, or that they didn't even really care. It was all about preservation and riding out the gravy train.
SapphireSun 9y ago
It's a strange feature of an economic system where the incentives require that successful participants blow themselves up. It requires that new=good and old=bad.
- ImSkeptical 9y ago
  It's not required that successful businesses blow themselves up, but if they do make poor choices, they will suffer, and perhaps pay with their existence, for those choices.
  - chiefalchemist 9y ago
    It's not required. But just the same it should always be a what-if possibility. I'd say the poor choices come from a tunnel vision approach to those decisions. Ultimately, in the context ans scope they are made, they are probably great decisions. However, reality is more far reaching.
- abakker 9y ago
  In technology especially, inertia is a liability. Not really surprising that most tech companies don't make it that long. What is more surprising is that our attachment to institutions includes for-profit businesses. Really, we should, as customers/consumers, just go with the best service, but culturally we can't help but think that something is lost when an old, useless company goes away.