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The issue is that they're not idiots but rational intelligent people that can understand different rewards. They can always get a new job and if the payout if h
by marcinzm 4y ago
The issue is that they're not idiots but rational intelligent people that can understand different rewards. They can always get a new job and if the payout if higher from nuking the company along the way then it's rational for them to be biased that way.
- valleyer 4y agoNext, describe traditional board members and CEOs.
- marcinzm 4y agoExactly my point except their interests tend to be aligned with the other stockholders of the company since they all make money from the stock. The cases where they don't are well known such as VCs insisting on massive growth (go big or go bankrupt), activist investors and so on.
- hither_shores 4y ago> Exactly my point except their interests tend to be aligned with the other stockholders of the company since they all make money from the stock. ...because of how executive compensation is typically structured. Non-executive employees can also receive stock grants.
- Hermitian909 4y agoBoard members often have the same issue, but in a different way. Probably the favorite two step approach: 1. Guide the company to do things that boost the stock price in the short term (1-3 years) but destroy the company's ability to compete on longer time lines 2. Dump your stock position This doesn't usually happen with founders, but I can personally attest to the fact that this has been done intentionally by board members of billion dollar businesses. There are also more subtle approaches, e.g. board members pushing for strategies that hurt the company, but boost the board members' other holdings.