As an investor I want to know how the pay of executives at companies I invest in is determined. I want them held accountable. I’m willing to go for a great package if the exec is earning it – but kick the bum out if the company is not heading in the right direction.
As an investor, don’t you already have the choice of “kicking the bum out” if they are not doing the job?
Second, does it really make a difference if they are making $100,000 or a $1,000,000 if they are not doing the job? As an investor you have the ability to show your approval of the job they are doing by either retaining that investment or selling it.
I base my decisions on disclosures. I’m not a large investor – a few stocks, some mutuals. I can vote at shareholder meetings, but how to vote without the disclosures? And how executives are paid is a factor in whether I buy or sell.
And you’re right, it doesn’t matter what the salary is as long as the job is getting done right (to a certain degree). But what about bonuses? Why should I retain a stock that has a board that pays bonuses to executives regardless of performance? Without better disclosures I may very well retain that stock. Investors need this information to make sound decisions.
I say if the guy is performing and making me money i shouldnt really care what he is making provided i can truly believe he is making me money and not doing an en— deal on me where it is all smoke and mirrors and the money is simply being diverted to his and other executives pockets through a sophisticated vehicle he /she create.
I think you came close to hitting the nail on the head. “Why should I retain a stock that has a board that pays bonuses to executives regardless of performance?”
But I think the real question would be “Why should I buy or retain stock that is not performing?”
Again, as investors our primary goal is to make money and that occurs when the company that we are investing in acheives and maintains a certain degree of performance. If that is met, then what else do we need and whY?
I care how executives are compensated because it gives me insights into their motivation. Take Costco for example. The CEO of Costco has an annual contract that runs less than a page, makes $350,000 a year and turned down a bonus because a near scandel happened on his watch. Costco makes tons of money and the stock is a good buy. Look at Home Depot. The CEO of Home Depot was running the company toward the ground, made tons of money and had a 9-figure golden parachute. He received bonuses even though the stock went down. If it’s not disclosed that the CEO gets bonuses for losing money I may foolishy assume he’s being held accountable. If the CEO gets more money for losing money he has no motivation to make me money. If he loses money for losing me money I’m more likely to stick with the stock for a turnaround. I need the numbers.
As an investor I want to know how the pay of executives at companies I invest in is determined. I want them held accountable. I’m willing to go for a great package if the exec is earning it – but kick the bum out if the company is not heading in the right direction.
Question…
As an investor, don’t you already have the choice of “kicking the bum out” if they are not doing the job?
Second, does it really make a difference if they are making $100,000 or a $1,000,000 if they are not doing the job? As an investor you have the ability to show your approval of the job they are doing by either retaining that investment or selling it.
I base my decisions on disclosures. I’m not a large investor – a few stocks, some mutuals. I can vote at shareholder meetings, but how to vote without the disclosures? And how executives are paid is a factor in whether I buy or sell.
And you’re right, it doesn’t matter what the salary is as long as the job is getting done right (to a certain degree). But what about bonuses? Why should I retain a stock that has a board that pays bonuses to executives regardless of performance? Without better disclosures I may very well retain that stock. Investors need this information to make sound decisions.
I say if the guy is performing and making me money i shouldnt really care what he is making provided i can truly believe he is making me money and not doing an en— deal on me where it is all smoke and mirrors and the money is simply being diverted to his and other executives pockets through a sophisticated vehicle he /she create.
I think you came close to hitting the nail on the head. “Why should I retain a stock that has a board that pays bonuses to executives regardless of performance?”
But I think the real question would be “Why should I buy or retain stock that is not performing?”
Again, as investors our primary goal is to make money and that occurs when the company that we are investing in acheives and maintains a certain degree of performance. If that is met, then what else do we need and whY?
I care how executives are compensated because it gives me insights into their motivation. Take Costco for example. The CEO of Costco has an annual contract that runs less than a page, makes $350,000 a year and turned down a bonus because a near scandel happened on his watch. Costco makes tons of money and the stock is a good buy. Look at Home Depot. The CEO of Home Depot was running the company toward the ground, made tons of money and had a 9-figure golden parachute. He received bonuses even though the stock went down. If it’s not disclosed that the CEO gets bonuses for losing money I may foolishy assume he’s being held accountable. If the CEO gets more money for losing money he has no motivation to make me money. If he loses money for losing me money I’m more likely to stick with the stock for a turnaround. I need the numbers.