Which is awesome in your sample size of 1. But in the real world my generation isn’t supporting social things because of professors and teachers. That’s a keyboard warrior talking point.
You’re forgiven. (ps, knowledge from 2006 schools being translated to today is kinda exactly what I’m talking about. You have zero experience and anyone who’s actually experienced it can immediately laugh at you and call BS)
So why are they trying to repeat the mistakes of the 20th century? Because they were born after the wall fell? I was born in 89… so technically I was. But this is not complicated stuff. It leads to the same place every single time it’s tried.
Probably because stagnating wages, increased debt load, and a very basic understanding of math showing all of what we’re doing now isn’t sustainable.
I’m impressed you were in college courses in 2006 to see these Marxist professors. What was your major?
Assuming it’s tried in the same way? Sure it does.
Again, because I find it funny that the free-market doesn’t necessarily care about your ‘rights’ and ‘freedoms.’ And might even help lead the charge against them. It itself doesn’t care about your rights, freedoms, well-being, or civic and social institutions. Like some said, whatever puts money in shareholders’ pockets.
It should be, but I think we both know there are external forces at play with stock prices. Trump tweets about steel tariff’s, Ford’s stock price goes down. A hurricane hits the Gulf, stock prices go down. So on and so forth.
I prefer to use as many internal forces as a performance measure as possible. Obviously, sales are affected by external forces too as are COGS and overhead, but management has greater control and influence over these things than they do over stock price.
I consider anything less than 5-years short term.
I don’t think stock options are the end of the world I just don’t like CEOs being torn between two masters if you will. Investors care about one thing and one thing only, stock price (dividends I suppose) often for short and medium term gains. If the business goes under in 10 years they don’t care. They’ll have sold out long before that. I just think catering to investors is a poor model for the long-term and for the economy as a whole.
It doesn’t necessarily need to be tied to current performance. It was just an example that popped in my head.
At a moment in time, perhaps and it can change at a moments notice. It’s too fickle, imo.
Is it an accurate way to measure value, though? If you look at almost any stock it’s a constant up and down. Here’s Tesla for the year:
The value of Tesla changed that much over the course of a year? Decisions will be made based on this performance? Investors will demand certain things based on this performance.
Maybe if we used 10 years worth of performance it would make some sense, not 3M, 6M, or a year.
Utter nonsense, and if you cracked a history book you’d know it was. The post WW2 economy was built on a completely different set of rules, and did amazingly. Granted, it wasn’t solely the rules that made that happen - but all the rules you say that “lead to the same place” of ruin helped drive one of best economic runs during the post-industrial revolution era, which was characterized by broad-based prosperity and economic security among the non-wealthy.
You were born in 1989. Stop making the mistake of thinking history started in the same year.
Finance. I would have taken Econ as well because I enjoy it, but I graduated HS early and I wanted to graduate college early as well.
Personal debt load is a choice. Credit cards, mortgages, college loans, car loans, Refi’s… they’re all optional.
The stagnating wages applies if you pick the wrong careers sure. But I just helped my mechanic buddy clean up his resume and get a job at a Mercedes/BMW/Porsche dealership. He is going to make more in 2019 then in 2.5 years where he was. Certainly more than me. The money is there if you want to work.
Every single marxist thinks they’re more clever than the last shmuck to try it. THIS TIME we’ll do it “right”.
That’s weird. I’m also a finance major (in a very very liberal metro) and I didn’t hear anything except the exact opposite of the ‘marxists’ you saw.
Absolutely. I don’t know how/why that matters though. There’s no takebacks on debt.
The stagnating wages applies to most industries in the world.
But then again, imagine how much fun we’d all have if all the nurses and teachers quit and became IT guys.
The morality we force upon citizens outside of the boardroom isn’t left out of the boardroom.
That’s an alt-right myth.
I was talking about command and control economies where the government owns the means of production. That does fail every time it has been tried. This was in response to youngsters calling for or preferring “socialism” .
The vibrant market with high taxes and safety nets (nordic/US) model can stay alive… if the leeches don’t get too greedy and kill the host.
The postwar period was not a remarkable growth period. Please see the real GDP graph below
Maybe just make the stocks vest in 5 or 10 years? I think the counter argument for a 10 year vest is how much impact you can actually have today to affect that.
To me it sounds like you are less against stock options used as incentive, and more against investor short-term thinking. I agree, but I don’t know what the best way would be to fix it. Remove quarterly reporting, make it 6m? Increase the number of years to vest options?
This is true for more than just stock. The stock for Tesla has been crazy because of a number of things, but largely around their inability to meet production expectations and turn a profit. Investors are speculating about the future of the company and Tesla has been all over the map with great potential but not able to turn out what they promise.
Almost everyone in the business school at Pitt was successful outside of academia and taught as a sort of low stress retirement (drove Mazerattis and ran PE firms). All of them were pragmatic and leaned right fiscally at least.
The school of arts and sciences where I took gen ed stuff (like econ) was 100% liberals without exception.
We could teach kids to cut that shit out and not max out every loan they’re offered. Let them know that debt is poison if they get in too deep.
I’m confused as to how this statement jives with the marxists in schools we should be fearing?
That’s rare for a sciences college. I didn’t even know they polled those teachers on their leanings.
And we teach that now, sure. But did my parents generation push that on my generation? LOL.
Pretty much the exact opposite in reality.
No one is advocating that, so you’re arguing with yourself.
Socialism isn’t command and control, but that misses the point anyway - the issue is socialism looks more and more appealing when capitalism looks like it’s not working for “the rest of us”. Doesn’t mean socialism is actually the better choice in the long run - it’s to make the point that capitalism isn’t a given, and there’s a chance something worse gets voted in if we don’t rescue it from its crony-fied version now.
And? The highest growth % of GDP in a given time frame is not categorically equivalent to the best performance of an economy. What was “remarkable” about it was that it contained steady growth that everyone got richer under.
Couldn’t a CEO make decisions that purposefully depress stock prices in the year(s) prior to his stock vesting?
What if a CEO leaves and his replacement tanks the stock over the next 5-10 years?
It’s a catch 22 either way I think.
That’s probably accurate. I would stick with their annual filing requirement and leave it at that.
I don’t love the vesting option because I think people should be paid for their efforts in real time, not down the road. That’s just my personal opinion, though. You could vest in 5 years and the stock might have quadrupled.
I would say speculation is probably my biggest beef with stock as a form of compensation.
Just thinking out loud here, what if John Smith CEO, buys/merges with a company that carries 10-years worth of loss carryforward because their proprietary whatever is necessary to launch a new revolutionary product. Say a spaceship or an electric car or idk a jetpack.
So for 10 years the company is breaking even or operates at a loss, but in the 11th year they launch and take off. How is that possible if the CEO is being held to the profit profit profit mantra of the market? 5-years in and he’s probably fired. Maybe less.
At the end of the day, it’s very difficult to force a person to act in someone else’s best interest (the company, employees, etc…) if it’s counter to their own. I’m not sure what the answer is.
That’s the counter, can’t be too long-term because then it’s out of their control.
I think this is incredibly hard to measure. If you’re paid based on this years profits, you do not have incentive for long-term performance of the firm.
Speculation is natural though. Every R&D dollar spend, capital expansion…etc. are based on expected future profits.
Agreed, in this case it is much better if the CEO is interested in the stock (perceived value) of the firm. The stock isn’t worth as much during the 10-year struggle to get to profits, but eventually it pays off and his shares are worth a lot.
Agreed, and the goal of stock compensation is to tie employee’s pay to firm performance.
Clearly Co-ops.
Agreed, but that’s where the board needs to step in. As a control/counter to a short term/annual performance perspective v. a long-term perspective.
You could potentially accrue an additional bonus to be paid out after x number of years of an average return on sales (or something). Just spit balling. I’m not sure that’s ever been done before.
Of course, but in this case the speculation is being done by people that have very little idea of what the inner workings of the company are or the vision that being implemented (hopefully). Their speculation is, will I meet my ROI requirements and when. Really nothing more as far as I can tell.
Ya, but he’ll probably be replaced before his vision comes to fruition. I guess he’ll get a nice severance package at least. At any rate, I don’t want the CEO to be concerned with the stock valuation because it will make staying the course over 10-years that much more difficult.
I mean, that goes without saying…
That’s essential what options do. If the firm is valued higher you get a “bonus” in the sense you can purchase at a discount. If the stock goes down the options are worthless.
You’ll have no disagreement with me on investor behavior, and that we could do a better job of evaluating firms. Hedge fund managers and wall street guys are paid a lot of money to evaluate companies on their reported metrics and make those calls and still get it wrong all the time. My personal investments are never individual companies because I feel like I have no idea what will happen next and it is all speculation.
The ex-CEO still gets the benefit unless he/she sells the shares immediately. I agree staying the course with activist investors would be challenging, they want ROI and are trying to pick companies (via stock) that give them the best returns on their investment. The company better have some good investor relations people to sell the vision.
As a two-time graduate and current faculty member of the institution being discussed, let’s just say BG might be a little over the top with this description.
