Wrong again, Cogoid. I'm an Independent, always have been, and want to see both parties starved of big money so votes buy elections; not dollars buying votes. Better yet, give'em enough rope and they'll hang themselves.
Oh,, wait!....
Returning value to shareholders does not mean increasing pay to employees. It means cyclically increasing the share price so that only marginally interested investors (not usually those seeking to hold long term and earn through dividends), themselves included, can appreciate gain.
rockdoc123 wrote:Returning value to shareholders does not mean increasing pay to employees. It means cyclically increasing the share price so that only marginally interested investors (not usually those seeking to hold long term and earn through dividends), themselves included, can appreciate gain.
If you work for a public company your ultimate boss is the shareholder. As an executive in a public company, your only goal is to serve the shareholder. Independent Boards ensure this happens (i.e. decisions made by the executive are in the best interest of the shareholder). This is not a socialist economy where the interest of the worker is considered other than what has to be done in order to incentivize said worker to deliver on their particular job at a high enough level that the shareholder ultimately benefits. If the worker doesn't like that arrangement then he is free to quit and go somewhere else or start his own company. IF the general public doesn't like that arrangement then they are also free to move to Russia or China or a similar jurisdiction. In some companies you see share options delivered down to the average worker level but at most, they are awarded at higher levels in the organization in order to tie performance to compensation. If the shareholder (the ultimate boss) benefits then so do those who delivered on the bottom line such that share price could increase. Company executives and especially Boards generally understand their investors quite well (believe me I've taken more phone calls from irate/interested shareholders than I care to remember) and they realize that if the majority are interested in steady cash flow from dividends they don't want to see you running around doing business that can jeopardize that lower risk cash flow. IF you do they vote with their feet which will eventually get you fired. This has happened to a few oil and gas companies I've watched over the past few years. This system works well for the vast majority of companies. It doesn't when compensation gets out of hand or where the Board is not independent and those are the cases everyone hears about in the press. The fix for this is activist shareholders who hold enough shares to force actions at the Board level.
They are paid as if they were the owners. They, in actual fact, act as if they were when they manage the company to provide only to please those who are not into owning the company for what that means, but only to make a quick profit.
Board oversight or no, the disjunction in American capitalism is taking place at the level of the philosophy of what it means to return value to shareholders. Does that only mean to raise the stock price by any means necessary, or does it mean to raise it while maintaining the concept of a going concern that has a purpose to exist? If the purpose is going to be left out of the concept, or the actions that manage the company are going to act against the idea of it being a going concern, then incorporation itself possibly ought not to be extended to the company as a means to protect its acting members, or its ownership.
In the right sort of economy it does not hurt the idea of the company being a going concern. When everybody does it, though, eventually there will be a price to pay. At first, that price is the indebtedness of your customers, for across the board people employed by companies that operate the same way as yours are your customers. That still won't make you notice what you are doing, though. Business won't be harmed. Then, when that indebtedness becomes onerous, that results in customers who will prefer lowest price as the marketing device they will gravitate toward. Suddenly, your company is vulnerable. Like the driver who rearends another and blames them, those executives will not often blame themselves, nor will their boards blame their lack of oversight. "Everybody was doing it." They were all blinded by privilege.
rockdoc123 wrote:In the right sort of economy it does not hurt the idea of the company being a going concern. When everybody does it, though, eventually there will be a price to pay. At first, that price is the indebtedness of your customers, for across the board people employed by companies that operate the same way as yours are your customers. That still won't make you notice what you are doing, though. Business won't be harmed. Then, when that indebtedness becomes onerous, that results in customers who will prefer lowest price as the marketing device they will gravitate toward. Suddenly, your company is vulnerable. Like the driver who rearends another and blames them, those executives will not often blame themselves, nor will their boards blame their lack of oversight. "Everybody was doing it." They were all blinded by privilege.
basically, this is what a capitalist system does. It competes with itself to the lowest point where producers are making profits and consumers are happy. If consumers want lower prices and nobody can provide them economically they are out of luck, if producers want higher profits and nobody is willing to pay a higher price point then they are out of luck. There is always a balancing point where it is impossible to cut costs any further to make a profit at a price that undercuts competitors. The companies that can live close to that margin happily have a long-term business, those who can't are doomed to an existence of good periods and bad periods.
I'm not sure I see the problem you are seeing here. For the most part, this has worked fairly well for a number of decades. There are, of course, examples where a CEO has gone off the reservation and not been reigned in by his Board but I believe those are only a small percentage of everything going on out there.
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