6 ms·

I would like some clarification, to me it seems very obvious that this Elop's tenure at Nokia accomplished exactly what it was intended to accomplish, and furth

by apalmer 13y ago

I would like some clarification, to me it seems very obvious that this Elop's tenure at Nokia accomplished exactly what it was intended to accomplish, and further it seems clear that the Board of Directors were in line with this plan. What exactly is the benefit of this plan for the Board of Directors? Is it literally the assumption that they were paid far in excess of the money they (I assumed) lost due to the stock tanking. And finally in a well run market, what is supposed to keep this kind of thing from happening? It seems like having the Board of Directors essentially scuttle a company for their own payoffs is not in the markets best interest, so i assume some mechanism is in place to try to reduce the likelihood of this occurrance.

glesica 13y ago
Whoever said anything about there being a "well run market"? I think it's pretty clear that, at least in the US, the incentives CEOs and boards face are almost laughably perverse.
- apalmer 13y ago
  Understood, but thats not really what I am asking. I want to know what is SUPPOSED to stop this kinda thing from happening in a well run market, regardless of whether the US is or isnt a well run market.
  - CodeCube 13y ago
    What's supposed to hedge this for the market is competition. There's nothing anyone can do to stop a dedicated board from tanking a company (for whatever benefit they get from doing so). But what that does is open up an opportunity for a competitor to step up and take the marketshare of the company that is going down.
    - apalmer 13y ago
      If I am understanding competition doesnt help the victim in a case like this. the victim isn't the consumer of the products produced, its the stock holders who own the company who are being fleeced. I guess it seems to me one can buy a company not for the price of the valuation, but for the price of the board of directors.
      - CodeCube 13y ago
        Oh, yeah ... the problem is that the average stockholder has entered into an agreement where they are at a disadvantage. By buying a relatively small amount of shares (ie. what most regular people do), they have no control over what the company does, they have no voice. So in reality, regular investors should invest with that risk at the forefront. It's obvious that most day traders and small time investors don't really take this risk factor into account ... but the mechanism does exist to mitigate it; doing your due diligence on the board of directors, and choosing not to invest (or selling your shares if the board changes).
  - stonemetal 13y ago
    Fiduciary duty seems like it should cover that. Surely they have something like that in Finland. https://en.wikipedia.org/wiki/Fiduciary#Breaches_of_duty_and_remedies https://en.wikipedia.org/wiki/Fiduciary#Breaches_of_duty_and... A fiduciary duty[3] is the highest standard of care at either equity or law. A fiduciary (abbreviation fid) is expected to be extremely loyal to the person to whom he owes the duty (the "principal"): he must not put his personal interests before the duty, and must not profit from his position as a fiduciary, unless the principal consents.
    - MaysonL 13y ago
      Who's the last person you heard of being penalized for ignoring fiduciary duty for personal gain?
      - stonemetal 13y ago
        stockholders sue all the time. http://www.bloomberg.com/news/2013-06-14/dole-food-shareholders-sue-over-ceo-s-645-million-bid.html http://www.bloomberg.com/news/2013-06-14/dole-food-sharehold... Not a penalty but the beginning of getting one.
    - chrisgd 13y ago
      Perhaps it was fiduciary duty that led them to sell the Company.
zmmmmm 13y ago
I know nothing of how it works in Finland, but in most countries the board of directors are legally obligated to act in the interests of shareholders. Knowlingly acting otherwise can be one of the few things that can bring personal liability into the equation. So in theory, the stockholders of Nokia could sue the the board of directors. The problem is, what do you get out of it? They can be stupendously wealthy and it will still not make any noticeable difference to the bottom line. Unless there is a significant stockholder that wants to simply make a point of principle, there will not be much chance anybody has the incentive to pursue it. I hope someone does because at very least I think there is a case to answer here - the whole situation is just too incestuous and dubiously structured right from the start.

by apalmer 13y ago

glesica 13y ago

Whoever said anything about there being a "well run market"? I think it's pretty clear that, at least in the US, the incentives CEOs and boards face are almost laughably perverse.

apalmer 13y ago
Understood, but thats not really what I am asking. I want to know what is SUPPOSED to stop this kinda thing from happening in a well run market, regardless of whether the US is or isnt a well run market.
- CodeCube 13y ago
  What's supposed to hedge this for the market is competition. There's nothing anyone can do to stop a dedicated board from tanking a company (for whatever benefit they get from doing so). But what that does is open up an opportunity for a competitor to step up and take the marketshare of the company that is going down.
  - apalmer 13y ago
    If I am understanding competition doesnt help the victim in a case like this. the victim isn't the consumer of the products produced, its the stock holders who own the company who are being fleeced. I guess it seems to me one can buy a company not for the price of the valuation, but for the price of the board of directors.
    - CodeCube 13y ago
      Oh, yeah ... the problem is that the average stockholder has entered into an agreement where they are at a disadvantage. By buying a relatively small amount of shares (ie. what most regular people do), they have no control over what the company does, they have no voice. So in reality, regular investors should invest with that risk at the forefront. It's obvious that most day traders and small time investors don't really take this risk factor into account ... but the mechanism does exist to mitigate it; doing your due diligence on the board of directors, and choosing not to invest (or selling your shares if the board changes).
- stonemetal 13y ago
  Fiduciary duty seems like it should cover that. Surely they have something like that in Finland. https://en.wikipedia.org/wiki/Fiduciary#Breaches_of_duty_and_remedies https://en.wikipedia.org/wiki/Fiduciary#Breaches_of_duty_and... A fiduciary duty[3] is the highest standard of care at either equity or law. A fiduciary (abbreviation fid) is expected to be extremely loyal to the person to whom he owes the duty (the "principal"): he must not put his personal interests before the duty, and must not profit from his position as a fiduciary, unless the principal consents.
  - MaysonL 13y ago
    Who's the last person you heard of being penalized for ignoring fiduciary duty for personal gain?
    - stonemetal 13y ago
      stockholders sue all the time. http://www.bloomberg.com/news/2013-06-14/dole-food-shareholders-sue-over-ceo-s-645-million-bid.html http://www.bloomberg.com/news/2013-06-14/dole-food-sharehold... Not a penalty but the beginning of getting one.
  - chrisgd 13y ago
    Perhaps it was fiduciary duty that led them to sell the Company.

zmmmmm 13y ago

I know nothing of how it works in Finland, but in most countries the board of directors are legally obligated to act in the interests of shareholders. Knowlingly acting otherwise can be one of the few things that can bring personal liability into the equation. So in theory, the stockholders of Nokia could sue the the board of directors. The problem is, what do you get out of it? They can be stupendously wealthy and it will still not make any noticeable difference to the bottom line. Unless there is a significant stockholder that wants to simply make a point of principle, there will not be much chance anybody has the incentive to pursue it. I hope someone does because at very least I think there is a case to answer here - the whole situation is just too incestuous and dubiously structured right from the start.