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I’d like to hear your reasons for #2. Here’s mine: CEO is largely a figurehead position. Boards know quite well that CEOs aren’t the clock maker toiling away a

I’d like to hear your reasons for #2. Here’s mine: CEO is largely a figurehead position. Boards know quite well that CEOs aren’t the clock maker toiling away at creating perfection. They have very talented senior staff, middle managers and individual contributors that actually make it happen. However, boards know the market doesn’t give a flying shit about those people. Boards know that CEOs carry a certain political weight in their very presence, and so they have to make their comp packages as attractive as possible so they have the best chance at attracting the best CEOs, because if they do, they know the market will respond positively. If a good CEO sees Company X sending their poor performing leader packing without a golden parachute, there’s no way he’s going to go there. If the market sees the same thing, they’re going to think the same thing. It’s all one big emperors new clothes bullshit show.

fastball 3y ago
Yeah, figurehead is definitely part of it. Kinda like when you hire a consulting firm to tell you about problems you already knew existed. They're not actually telling you anything new, they just provide useful cover for whatever actions you already wanted to take. Also: - Nepotism / boy's club – everybody is kinda friends / in the same circle. Once you get in, you're mostly in for life. - Modern financial instruments allow the smartest person in the room (i.e. hedge funds, etc) to make money on either side of the inflection point. Doesn't matter if a bad CEO tanks the stock price if you expected that to happen and are the one with puts while the rubes (retail investors) are holding the dwindling stock.
snapplebobapple 3y ago
I think you're missing/misunderstanding the mechanism for the above. Boards willfully don't know much of anything at a large corp (especially with all the DEI nonsense putting even less competent people on the board). You have to remember that this is an infinitely repeating game and there's basically only two board member strategies at play and they depend on whether there is a single large and involved shareholding block or not. if there is a large shareholding block actively involved you can play the competent and possibly disagreeable board member strategy because your tenure on the board is based on keeping the involved shareholder happy and voting for you. If there is no large and involved shareholding block (i.e. many, many large companies today) then the winning board member strategy is getting management to keep recommending you because an overwhelming majority of the time the uninvolved smaller shareholders vote management recommendation. You want a board to behave like the first scenario, but it's usually the second scenario you are in. As the game repeats that translates to higher comp to the ceo and to the board (since the ceo recommends his buddies deserve more comp) and the board basically tries to side with the ceo as far as it can without incurring personal legal liability and as long as that ceo doesn't underperform in a way that is publicly embarassing they can often hold on for several years and make out with millions while the board gets decent comp for almost no work. I don't think you can easily fix this but I do notice that many of these companies are pretty clearly oligopolists under the pre-rehnquist definition so the solution could take the form of breaking these large companies up until the smaller companies do end up with a share holding block that both cares and is big enough to discipline the board and ceo.
freeopinion 3y ago
Boards are often composed of failed or failing CEOs, celebrities, and others with questionable management skills. Let's say you are on the board of Apple and you are looking at Tim Cook's retirement. Would you look at a Senior VP from Microsoft? An Associate COO of Intel? The former CTO of Ford Motors? A department head at Via? Ryan Reynolds? The CFO of Apple? The person who was Jim Keller's coworker at Harris and DEC, and worked two levels below Jim Keller at AMD and SiByte? Can you or anybody put in writing what qualities a prospective CEO of Apple should possess that would differentiate one of these candidates above the others? Let's say you are Al Gore or Al Gorsky. How do you decide who to hire?
- raizer88 3y ago
  Boards don't do the researching part but headhunters. Then the board choose the pick from a nice pptx.
  - freeopinion 3y ago
    I claim that headhunters can't do it either. Nor can anybody else.

fastball 3y ago

Yeah, figurehead is definitely part of it. Kinda like when you hire a consulting firm to tell you about problems you already knew existed. They're not actually telling you anything new, they just provide useful cover for whatever actions you already wanted to take. Also: - Nepotism / boy's club – everybody is kinda friends / in the same circle. Once you get in, you're mostly in for life. - Modern financial instruments allow the smartest person in the room (i.e. hedge funds, etc) to make money on either side of the inflection point. Doesn't matter if a bad CEO tanks the stock price if you expected that to happen and are the one with puts while the rubes (retail investors) are holding the dwindling stock.

snapplebobapple 3y ago

I think you're missing/misunderstanding the mechanism for the above. Boards willfully don't know much of anything at a large corp (especially with all the DEI nonsense putting even less competent people on the board). You have to remember that this is an infinitely repeating game and there's basically only two board member strategies at play and they depend on whether there is a single large and involved shareholding block or not. if there is a large shareholding block actively involved you can play the competent and possibly disagreeable board member strategy because your tenure on the board is based on keeping the involved shareholder happy and voting for you. If there is no large and involved shareholding block (i.e. many, many large companies today) then the winning board member strategy is getting management to keep recommending you because an overwhelming majority of the time the uninvolved smaller shareholders vote management recommendation. You want a board to behave like the first scenario, but it's usually the second scenario you are in. As the game repeats that translates to higher comp to the ceo and to the board (since the ceo recommends his buddies deserve more comp) and the board basically tries to side with the ceo as far as it can without incurring personal legal liability and as long as that ceo doesn't underperform in a way that is publicly embarassing they can often hold on for several years and make out with millions while the board gets decent comp for almost no work. I don't think you can easily fix this but I do notice that many of these companies are pretty clearly oligopolists under the pre-rehnquist definition so the solution could take the form of breaking these large companies up until the smaller companies do end up with a share holding block that both cares and is big enough to discipline the board and ceo.

freeopinion 3y ago

Boards are often composed of failed or failing CEOs, celebrities, and others with questionable management skills. Let's say you are on the board of Apple and you are looking at Tim Cook's retirement. Would you look at a Senior VP from Microsoft? An Associate COO of Intel? The former CTO of Ford Motors? A department head at Via? Ryan Reynolds? The CFO of Apple? The person who was Jim Keller's coworker at Harris and DEC, and worked two levels below Jim Keller at AMD and SiByte? Can you or anybody put in writing what qualities a prospective CEO of Apple should possess that would differentiate one of these candidates above the others? Let's say you are Al Gore or Al Gorsky. How do you decide who to hire?

raizer88 3y ago
Boards don't do the researching part but headhunters. Then the board choose the pick from a nice pptx.
- freeopinion 3y ago
  I claim that headhunters can't do it either. Nor can anybody else.