Originally published at: http://boingboing.net/2017/06/13/failing-up.html
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How can someone who owns stock in a company inform the company that, as a shareholder, you are unhappy with the way they conduct their business? I imagine that unless you own a significant portion of the company’s stock, you get the equivalent of a pat on the head and get told to run along and play if you complain. Most shareholders have such tiny holdings (either as individual stocks or as part of a mutual fund) that their voices are a drop in the ocean.
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Besides major shareholders having a say, shareholders can protest or revolt en masse to make their voices heard. That’s what shareholder advocacy groups do. When the board members are put up for election, shareholders can vote them out if they organize.
Edited to add: this is exactly what happened when Roy Disney organized Disney shareholders to vote out Michael Eisner in 2004 at the shareholders meeting.
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Cory? “The board of directors at Mylan have rewarded…” The board HAS awarded.
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The CEO issued a statement:
“Very clearly this company is named Mylan. It is not Yourlan.”
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Is it relevant that you have to go back over a decade to find an example?
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It was an example that came to mind off the top of my head, as a longtime Disney shareholder who was involved in that specific shareholder revolt.
Another good example would be Exxon, whose shareholders banded together and utterly rejected the company’s opposition to the Paris climate agreement and forced the company to change its official position.
If you have other examples, please share!
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So, uh, the guillotines… When?
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Even if we accepted the “blah, blah, fiduciary duty to maximize shareholder value!” sociopathic homo economicus stuff; what seems like a very tough sell is why paying so very much for a CEO is value-maximizing for the shareholder.
Somehow, demands that the human resources be rightsized and the shareholders appeased are treated as a routine and sensible aspect of management when you are talking about the relatively cheap ones; but when dealing with situations where you could save $100million with a single layoff it’s some sort of crazy idea.
Do we really think that Mr. Coury’s position couldn’t be filled by a $75 million/yr option? Quite possibly even a $10million/yr one?
Even if you have no problem with a lawful-with-heaping-side-of-neutral/evil pricing strategies; why accept on the high end employee compensation that would have you howling for layoffs in the cheap seats?
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How about a fucking $75,000 a year option? What the hell do CEO’s do that’s worth so god damn much, except making everyone else in the world miserable, especially their employees and customers? The decisions they make could probably be better made by a dead squirrel on psilocybin.
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< ahem >
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Depending on the local cost of living, getting someone to show up in a nice suit, have an MBA from somewhere, and make unpopular decisions for only $75k might be a bit optimistic.
Just by way of example, Glassdoor claims that “Project Manager” averages just over $90k nationally, somewhat higher in expensive cities; and unless you’ve abandoned all hope in the very concept of the CEO(in which case you should probably just replace them with their executive assistant(still 55-60k depending on market; and they’d probably deserve a raise to go with the change, though this could certainly save bucketloads of money when the situation is hopeless anyway, like Yahoo, where it seemed unlikely that anyone could have saved the operation; but plenty of people could have wound it down for vastly less money); it seems unlikely that someone with a reasonable hope of not screwing it up would be less competent/qualified than a project manager.
I don’t have a terribly comprehensive grasp of salary data for different job descriptions, so I can’t venture a precise number; but but “$15k less than the guy we’d trust to manage a project” seems on the low side for managing a company; but my skepticism kicks in in a big way as the numbers keep climbing, especially in cases where nobody seems to be able to provide examples of particularly brilliant, rather than merely competent, work on the part of the manager in question.
If the salary is down in the range where you would be competing with a variety of middle-management and skilled professional(sometimes even the better-off trades); I can understand why you might feel like you were having trouble attracting the candidates you really want. Once you get to values where most of the population, even the relatively skilled and/or well educated part of it, could barely dream of earning that kind of money over the course of a decade or more; the “seriously, you can’t find anyone to do it for half as much?” argument starts to gnaw at you.
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Being pals and schoolmates with other CEOs. Networking is the name of the game.
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Nice analysis! Maybe I low-balled it a bit, but when I see my prescription costs just going higher every year, it is a sore point, to say the least. Fortunately I don’t need Epipens, but I sympathize with those that do – and don’t have insurance. Like I did for awhile long ago.
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A little something that I like to call Making America Great Again!
Why do you hate our freedom?
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You realize that every corporate entity has a CEO? What that three letter title means can differ so greatly by instance, there’s really no point in comparing people solely by the basis of the title. I have a C in my title, I report to the CEO, I respect him greatly, he’s fantastic, and the company we work for is less than 30 people.
Some CEOs suck. Some are very brilliant, exceptionally hard-working people with very unique combinations of qualities. Being a very good manager is a very useful skill, but being a “CEO” doesn’t grant you with the powers of being a good manager. But for every sucky company exec, there are many examples of great ones. Again, nothing about the title inherently grants a specific positive or negative set of traits and associated skills or foibles.
As far as salaries go, there are a decent number of people in industrialized nations who earn the equivalent of six figure salaries. It’s not that uncommon. Definitely more people making minimum wage or barely above, I get that. But there is a realm of difference between someone who is making in the low six figures per year and living comfortably, and someone who wrecks their company in one or more ways, gets kicked out, and gets an 8 figure golden parachute.
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This. I worked for a company who had a series of useless CEOs, each one with grand ideas of how to save the company, and all of the ideas were a day late and a dollar short. And we workers watched while each one sailed away on their golden parachutes while the stock price went lower and lower, and more and more stores closed…
That company no longer exists.
If the CEOS are genuinely smart, hard workers who benefit the company, then I suppose they might somehow be worth their oh-so-high salaries. But there are far, far too many out there who are only in it for themselves and wind up driving their companies into bankrupcy, and their employees to the unemployment line, while they cheerfully go off to wreck yet another business… and another… and another… and never seem to suffer for it. This is why so many people are angry when we hear how much CEOS make.
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But again, I’ll reiterate – the vast majority of CEOs don’t match this, heck, many of them barely use the title. It could be a guy who owns a laundromat, and works there all day long. It could be the CEO of a ~30-person tech company like the one I’ve been at for 13 years. Our CEO began as an intern about 12 years ago, worked his way up, busted ass the entire time, contributed to our success dramatically over those years, and is as deserving of the responsibilities (and rewards) of the title as anyone I can think of.
Big ol’ corporate CEOs are a very small percentage of the overall pool of CEOs, and I think it just sounds so unbalanced when we use the title in such a broad way, and with such a predominantly negative slant. Heck, many CEOs are the CEO of their own company which they built from scratch.
Note that the shareholders were probably (and awfully) very happy with performance.
As things got hairy, ethical funds would have sold the stock (and taken the pleasing profits on their purchase for themselves), and the mix of investors would have tended more towards “hard-bitten” holders who are uber-capitalist.
Hence not much happened.
Who knows - many BBers may well have 501ks or other investments that were or even still are in this stock.
As an investor population, the way to drive action is to make sure you’re in ethical stocks only. That used to mean hippies, but now means any company that runs itself sensibly and with an eye on reputation.
Not hard to do.
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