Depending what "doing well" means, all you're saying is that keeping the stock value high is good business for the shareholder. I also benefit from that strategy, when it comes to my 401K and other plans, but that doesn't mean this strategy works well for the companies' employees.
Companies that were once the envy of the world, as innovative technology powerhouses, have a strange way of becoming shadows of their former selves. HP is in the news these days, but surely you can think of many others. I can.
Here's a simple example of CEO thinking. There's a rule of thumb that says, if you aren't #1 or #2 in a particular field, get out of that business. The objective is not to stay in and strive to become the #1 or #2, but divest yourself of that work, employees and all. I'm not saying that this isn't a good strategy for share value, it may well be, but I find it impossible to be pollyanish about what this means to the employees. Which is what is being discussed here.
"'Often does not mean 'always' or even 'most of the time.'"
Often means, in this context, that a CEO primarily obsessing over the stock value is only secondarily, if at all, concerned about the employees. As a matter of fact, depending how long this person plans to remain CEO, he may not even be concerrned about making sound long-range strategic decisions. Just do what it takes to bring the stock price as high as possible, in the near to middle term, then retire and quick sell the stock.
US auto companies were a good example of this sort of short-term thinking, starting in the 1970s and on into the 1990s. It bordered on comical, were it not for the negative effects on the US economy. It wasn't JUST the unions.
The company I used to work for had a CEO who told us that his "primary concern was the shareholder." Soon after which, he sold off our division. Some 18 years later, our division is still doing great, as part of the company that bought it. Point being, keeping a profitable division going was not the original CEO's concern. Stock value was.
It matters what a person's objectives are. I feel no compulsive need to make excuses for people who are ludicrously overcompensated. That includes CEOs of large corporations, Hollywood stars, or star pro "athletes."
Not quite on track but over on the article about HP laying off 5000 employees, I found this. Apologies Paul.C, I have no way of contacting you so hope you don't mind me quoting you:
Re: HP Lays Off 5.000 More Employees paul.c 1/1/2014 2:30:58 PM
I worked for HP during the 50th anniversary. Bill and Dave were retired but the company was still run the "Bill and Dave way". Management was proud that no one, not one single employee, had ever been laid off in the history of the company.
Obviously the CEO's since then didn't read the "HP Way" or figured they knew better than the founders. What a shame.
Bit of a contrast to todays managers who can't wait to lay workers off - it helps the stock price....
Not sure why the quote won't cover the whole column width - apologies...
"Although I don't hold with huge CEO salaries I don't for one minute think you should distribute it to the workers - it would amount to a few hundred dollars each at most. But there has to be a fairer way of doing things."
January 2016 Cartoon Caption ContestBob's punishment for missing his deadline was to be tied to his chair tantalizingly close to a disconnected cable, with one hand superglued to his desk and another to his chin, while the pages from his wall calendar were slowly torn away.122 comments