Warren Buffett: Stock Options Destroy Shareholder Value
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- เผยแพร่เมื่อ 1 พ.ย. 2024
- Warren Buffett has spoken extensively about the negative effects of stock option compensation for owners of businesses, and in this video he explores how value is destroyed by compensating employees and executives using options.
The lack of agency cost is an under appreciated but incredibly valuable (for shareholders) feature of the corporate culture within Berkshire.
which year was this shareholders' meeting
Finally, a true discussion of how lousy performance is rewarded in the corporate world due to stupid stock options and other gimmicks. Compensation for all people in a company that we invest in as investors must be tied only to performance. Why do CEOs get to call the shots? We investors took the risk and made the investments. This is why I am independent of any political party. The CEO gravy train needs to be ended now. Great discussion and wisdom.
You as an investor can choose to get off your @$$ everyday and start a company yourself. Then you will realise the entire gravy train of bums riding on other’s labour is riding on talent acquisition and it’s very hard for companies to convince people to work for cheap if they have alternatives. Stock options tend to create this illusion of profit sharing amongst the employees and company get to keep its cash flows.
As for executive compensation, it’s akin to the amount of impact their decisions have. It’s hard to have a CEO make billions worth of decisions every quarter and be content with a couple million bucks. You’d need heavy handed investors with meaningful stake in order to be able to make reforms but then again, the executives can just leave for the competition.
@@ToastyMeadows As an investor I worked very hard for every dime I made to invest. I ran projects for corporations and they were successful and I was compensated in direct relation to the success of the project. Pay for performance is the way to go. No pay for what the good old boys think of you or for your popularity. The people that started the company and did the hard work were NOT corporate CEOs except in rare circumstances. Owners of companies, like Henry Ford, had all their skin in the game, not the glory boys with their MBAs. Let the executives leave for the competition if they are incompetent. The competition will then lose. Why should CEOs that have failures be richly rewarded? If a CEO produces they get rewarded, if not force them to leave. Socialism for the rich is why capitalism is being rejected. Adam Smith was about REAL competition, not the current socialism for the rich. If workers are productive richly reward them, if not show them the door. Pay for performance works, I have seen it.
Msl1207
Do not forget Elon Musk, he was all in both at Tesla & SpaceX.
His options at Tesla are very rich but he had to perform to earn it.