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Imagine if you're the CEO of the company and you own 100000 shares of it. Then your net-worth between 100$/share and 120$/share will differ by $2 million. Quite
by blueterminal 6y ago
Imagine if you're the CEO of the company and you own 100000 shares of it. Then your net-worth between 100$/share and 120$/share will differ by $2 million. Quite a difference, isn't? And I think most board members hold certain amount of company's stock, and usually most people want their net-worth to grow as much as possible, so they try to do certain things to increase the stock price.
That's one of negative things about stocks in general in my opinion, because people quite often have short-term (lasting a quarter or two) outlook.
- shoo 6y agoSame argument is also possible if the CEO/board/other insiders have a decent chunk of their net worth as options for the company stock. But in that case, the increase in insider net worth can be highly nonlinear as a function of the price of the company's share price.
- pmiller2 6y ago> That's one of negative things about stocks in general in my opinion, because people quite often have short-term (lasting a quarter or two) outlook. That could be easily fixed by requiring all executive and board members' stock to be held for, say, 3 years after vesting before selling.
- lberk 6y agoHas it really vested at that point then? Or is it just a longer vesting period?
- bruce511 6y agoI guess that depends on your understanding of "vesting" - and my understanding may be faulty. As I understand it, if I leave the business before the vesting I get nothing. When the stock vests it becomes mine. A lock down of the stock then means I can't trade it, but it remains mine (regardless of whether I stay or leave.) Once the lock is lifted I could sell it. So in that sense there's a difference, yes.
- vpoulain 6y agoI mean that making money with public stock market make hardly sense for me. It is not correlated anymore with the value you can bring.