Comments on: The 5 Biggest Lies on Wall Street http://www.theamateurfinancier.com/blog/the-5-biggest-lies-on-wall-street/ Thoughts on Money, Investing and Life Wed, 08 Feb 2012 18:41:13 +0000 hourly 1 http://wordpress.org/?v=3.2.1 By: Roger http://www.theamateurfinancier.com/blog/the-5-biggest-lies-on-wall-street/#comment-9 Roger Thu, 26 Feb 2009 06:32:00 +0000 http://www.theamateurfinancier.com/blog/?p=24#comment-9 I brought up politics, as it seems that too many of the large shareholders are executives themselves, which makes it harder for change to come from the inside. But I do agree; it'd be much better for shareholders to rise up and demand more reasonable salaries (and bonuses, golden parachutes, and all other compensation), especially if the executives do not perform. Good to see agreement on the broader points, at least. I brought up politics, as it seems that too many of the large shareholders are executives themselves, which makes it harder for change to come from the inside. But I do agree; it’d be much better for shareholders to rise up and demand more reasonable salaries (and bonuses, golden parachutes, and all other compensation), especially if the executives do not perform. Good to see agreement on the broader points, at least.

]]> By: My Life ROI http://www.theamateurfinancier.com/blog/the-5-biggest-lies-on-wall-street/#comment-8 My Life ROI Wed, 25 Feb 2009 15:55:00 +0000 http://www.theamateurfinancier.com/blog/?p=24#comment-8 I don't see why politics would come into play (or even could come into play?)... this is something that the shareholders should demand. <br/><br/>If the point of the company is to increase both shareholder and stakeholder value then they need to justify the return on investment that is their salary.<br/><br/>But that's just a moot point about the politics thing, we seem to agree! :) I don’t see why politics would come into play (or even could come into play?)… this is something that the shareholders should demand.

If the point of the company is to increase both shareholder and stakeholder value then they need to justify the return on investment that is their salary.

But that’s just a moot point about the politics thing, we seem to agree! :)

]]> By: Roger http://www.theamateurfinancier.com/blog/the-5-biggest-lies-on-wall-street/#comment-7 Roger Wed, 25 Feb 2009 14:53:00 +0000 http://www.theamateurfinancier.com/blog/?p=24#comment-7 I think there has to be some way to get CEOs to think in longer terms than just quarter to quarter. Tying bonuses to the company's later performance is one option; it will get CEOs to stick with the company for the long term (if they have to be there at least five years to start collecting bonuses, it'll discourage CEO turnover), and focus on making sure the company takes actions to survive for years, rather than aim to make the highest profits possible now regardless of long-term expenses.<br/><br/>Another option would be to limit CEO's golden parachutes if the company is in worse shape when they leave then when they start. That way, CEOs won't have as much incentive to leave a company that's suffering and 'parachute' into a healthier corporation.<br/><br/>The problem is implementing these ideas, when corporations have such heavy political influence (read: they make big campaign contributions, to both parties). I think there has to be some way to get CEOs to think in longer terms than just quarter to quarter. Tying bonuses to the company’s later performance is one option; it will get CEOs to stick with the company for the long term (if they have to be there at least five years to start collecting bonuses, it’ll discourage CEO turnover), and focus on making sure the company takes actions to survive for years, rather than aim to make the highest profits possible now regardless of long-term expenses.

Another option would be to limit CEO’s golden parachutes if the company is in worse shape when they leave then when they start. That way, CEOs won’t have as much incentive to leave a company that’s suffering and ‘parachute’ into a healthier corporation.

The problem is implementing these ideas, when corporations have such heavy political influence (read: they make big campaign contributions, to both parties).

]]> By: My Life ROI http://www.theamateurfinancier.com/blog/the-5-biggest-lies-on-wall-street/#comment-6 My Life ROI Wed, 25 Feb 2009 05:01:00 +0000 http://www.theamateurfinancier.com/blog/?p=24#comment-6 The CEO thing really grinds my gears. It really kills me when the company gives immediate bonuses or even advance bonuses (on future earnings).<br/><br/>I think a good way to curb #4 would be to tie bonuses to performance 5 years down the line.<br/><br/>What do you think? The CEO thing really grinds my gears. It really kills me when the company gives immediate bonuses or even advance bonuses (on future earnings).

I think a good way to curb #4 would be to tie bonuses to performance 5 years down the line.

What do you think?

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