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Jensen is an arbitrary example. I'm asking how do you disentangle company performance from internal and external factors. If you had a company that was making
by Pet_Ant 11mo ago
Jensen is an arbitrary example. I'm asking how do you disentangle company performance from internal and external factors.
If you had a company that was making buggy whips at the invention of the automobile, you expect the company profits to go down at no fault of the CEO. A better CEO just changes the slope not the direction.
So what you want to do is not reward based on performance of the company, but on the CEO and to do that you need to figure out the "wins above replacement" [1]. How much better did the CEO do than any schmuck chosen at random.
[1] https://en.wikipedia.org/wiki/Wins_above_replacement https://en.wikipedia.org/wiki/Wins_above_replacement
- adastra22 11mo agoWhat investors want is a CEO that returns more shareholder value, full stop. I fail to see an argument here for why the Tesla pay package doesn’t meet that criteria. It’s essentially like a stock picker who only takes their fee from how much better their fund does vs the S&P 500.
- eszed 11mo ago> a stock picker who only takes their fee from how much better their fund does vs the S&P 500. What funds have that fee structure? Genuine question: I hadn't heard of any, but it intuitively seems "fairer" than the conventional two and twenty.