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That's true, but CEOs (in general) are also in a unique position to create the appearance of value for stockholders through financial engineering, acquisitions,
by anigbrowl 3y ago
That's true, but CEOs (in general) are also in a unique position to create the appearance of value for stockholders through financial engineering, acquisitions, buybacks and so forth. They're able to leverage the resources of the company in unusual ways that don't necessarily have anything to do with operations or direct revenue, including firing other workers to improve the balance sheet.
And once they're retired or been forced out or moved on to another firm, they're free to divest their earned stock without much scrutiny; I've never heard of a CEO being critiqued for selling off stock in a former employer. So in that sense, money is money.
- anonuser123456 3y agoSo what? The principal agent people has been understood by investors since the time of Adam Smith. Everyone is already aware of this.
- anigbrowl 3y agoSo read it in the context of the comment to which it replies.
- robertlagrant 3y ago> So in that sense, money is money. Ye-es, but only if the company is doing well. If the stock collapses, which it can do in a lot of companies, then it's not money. Imagine if Microsoft hadn't pivoted successfully to its new form, or if Google fails to find its footing in a ChatGPT world. Those are big, vital things that need navigating, and they are worth incentivising CEOs for. You might say that the vesting period should be longer, and perhaps that's right, but then other companies will poach them with shorter vesting periods, and the usual market dynamics apply where companies are vying for talent.