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Bert22306
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CEO
Re: Greedy CEOs
Bert22306   1/2/2014 4:52:29 PM
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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.

rich.pell
User Rank
Blogger
Re: Greedy CEOs
rich.pell   1/2/2014 4:35:27 PM
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Well, if that is the case (and I do not agree that it is) then it must be a very successful strategy as most big corporations are still around and doing well.

Bert22306
User Rank
CEO
Re: Greedy CEOs
Bert22306   1/2/2014 3:53:51 PM
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"But is anyone suggesting that a majority of CEOs are 'primarily obsessing' over their companies' stock values?"



CEOs of the big corporations? Sure. That's what the board of directors want them to do. All you have to do is ask them. Simple question: "What is your primary objective?"

rich.pell
User Rank
Blogger
Re: Greedy CEOs
rich.pell   1/2/2014 12:46:06 PM
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"...a CEO primarily obsessing over the stock value is only secondarily, if at all, concerned about the employees."

No argument there.  But is anyone suggesting that a majority of CEOs are 'primarily obsessing' over their companies' stock values?



Bert22306
User Rank
CEO
Re: Greedy CEOs
Bert22306   1/1/2014 7:50:18 PM
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"'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."

David Ashton
User Rank
Blogger
Re: Bill and Dave
David Ashton   1/1/2014 2:55:23 PM
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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...


zeeglen
User Rank
Blogger
Re: Greedy CEOs
zeeglen   1/1/2014 9:57:19 AM
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>"Shareholders" who are only looking for quick returns are likely not share "holders" at all, but stock traders.

Exactly! Parasites who only want to make a quick buck off those who do the actual innovating.

rich.pell
User Rank
Blogger
Re: Greedy CEOs
rich.pell   1/1/2014 8:33:03 AM
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"Because they often are."

"Often does not mean "always" or even "most of the time."

"Shareholders want quick returns."

Who says?  "Shareholders" who are only looking for quick returns are likely not share "holders" at all, but stock traders.

MeasurementBlues
User Rank
Blogger
This explains it all
MeasurementBlues   1/1/2014 12:49:08 AM
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Make More, Know Less, explains in simple math why the CEO makes more than you do.

Bert22306
User Rank
CEO
Re: Eating the seed corn
Bert22306   12/31/2013 6:58:37 PM
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"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."

Well said, David.

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