Fixing The Game: Bubbles, Crashes and What Capitalism Can Learn From The NFL. By Roger Martin.
Also an article about the book to get the gist of it.
While I post these links i ironically have seen two WSJ updates flash on my iPad about GS and JPM far surpassing their expectations.
[quote=âJediWupAss, post:17, topic:29556â][quote=âJ Felt, post:16, topic:29556â][quote=âJediWupAss, post:15, topic:29556â]If you stop thinking about shareholders as shareholders and start thinking about them as owners in the company then it makes sense. Doesnât every owner want their business to be profitable for them? [/quote]But there is a difference. Business owners typically care about long term and sustainable success. The current trend for shareholders is âgive me money now!â with complete disregard for the future of the company or the well-being and happiness of the employees.
Owners are typically hands on and directly involved with employees, meaning each person truly is more than a number. Shareholders just view you and I as entries on a ledger.[/quote]
Correct which is why the ceo and senior leaders are so important. They are the ones who need to sell that to the shareholders, but instead they go along with the short term gains. Which takes us back to CEO pay - man if you get a really good CEO that can sell a vision, provide long term growth, short term gains and maintain employee morale - they are worth some insane salary.[/quote]Iâd argue that any CEO who is able to do that probably doesnât actually make that insane salary. Look at Costcoâs, for example.
Too bad it would be a massive blow to the ego to admit that the ROI of your multi-million dollar salary isnât there.
The fact that there are so many of these low-level jobs that are fulltime yet require people to get public assistance (at least they easily qualify for it) shows something is wrong with the way the system is working. Not sure the best way to fix it, but we need to better balance the downward pressure on wages for these jobs that donât require many special qualifications but still need to get done. Higher minimum wages and better enforcement against wage theft might help, but these seem like putting a bandaid on the problem to me.
clt says this will be an interesting experiment in motivation.
Stop globalization?
[quote=âJ Felt, post:23, topic:29556â][quote=âJediWupAss, post:17, topic:29556â][quote=âJ Felt, post:16, topic:29556â][quote=âJediWupAss, post:15, topic:29556â]If you stop thinking about shareholders as shareholders and start thinking about them as owners in the company then it makes sense. Doesnât every owner want their business to be profitable for them? [/quote]But there is a difference. Business owners typically care about long term and sustainable success. The current trend for shareholders is âgive me money now!â with complete disregard for the future of the company or the well-being and happiness of the employees.
Owners are typically hands on and directly involved with employees, meaning each person truly is more than a number. Shareholders just view you and I as entries on a ledger.[/quote]
Correct which is why the ceo and senior leaders are so important. They are the ones who need to sell that to the shareholders, but instead they go along with the short term gains. Which takes us back to CEO pay - man if you get a really good CEO that can sell a vision, provide long term growth, short term gains and maintain employee morale - they are worth some insane salary.[/quote]Iâd argue that any CEO who is able to do that probably doesnât actually make that insane salary. Look at Costcoâs, for example.
Too bad it would be a massive blow to the ego to admit that the ROI of your multi-million dollar salary isnât there.[/quote]
Worth. It isnât like CEOs say I want this and it magically appears. It gets approved by a board. If a CEO is doing an incredible job then he/she is going to get offers to go other places. A board then has a choice. Really it isnât any different than coaches in college sports. You can hope that they love the school and campus and athletic department and team and elect to stay put regardless of the cash, but you canât count on that to retain your leader.
Also the Costco CEO in 2011 had a 630k or so salary which doesnât seem bad. However he also got 12.3 million in stock options that year so we have to make a distinction is it total comp or salary? I actually like the low annual salary and stock options as it rewards ceos for having a longer vision if they want that stock to be worth anything when they can sell it. Just have to make sure the stock is restricted for 5-10-15 years.
If a CEO is leading a company with low employee turnover, high morale, solid earnings and dividends and stock price growth - you can have a pretty high comp package and still be worth the ROI.
The key is COSTCO is able to operate efficiently and have the right people in place for the jobs and the CEO isnât greedy. In 2011 they had almost 90 billion in revenue and 12 billion in gross income pair that with allowing the stock to grow to the $150 or so it is today I would say that total comp of about 13 million has a solid ROI.
Itâs tough. Raising the min wage is something that should happen, but IMO not to the 15 range like some want. Aside from what that does to the businesses, prices and employment side of things the salary landscape would be really messed up. At $15 an hour and 40 hours a week that puts an entry level job requiring zero education into the same pay grade as a starting teacher that requires a college diploma or other entry level jobs where at least a HS diploma if not a college degree is expected. Which means then all of those careers should grow into this new pay scale, but then the min wage is left right where they are today in terms of how far away they are from everyone else and over time prices in goods and services would adjust and we are back to where we are today.
Iâd take the $70K job, even if it only lasts a couple of years. Save my $ in the meantime until I have to go back to lower pay.
Those of you bitching about shareholders, Iâm to assume you have your Iraâs & 401-kâs in cash, instead of investments, or are yâall hypocrits?
[quote=âJediWupAss, post:27, topic:29556â][quote=âJ Felt, post:23, topic:29556â][quote=âJediWupAss, post:17, topic:29556â][quote=âJ Felt, post:16, topic:29556â][quote=âJediWupAss, post:15, topic:29556â]If you stop thinking about shareholders as shareholders and start thinking about them as owners in the company then it makes sense. Doesnât every owner want their business to be profitable for them? [/quote]But there is a difference. Business owners typically care about long term and sustainable success. The current trend for shareholders is âgive me money now!â with complete disregard for the future of the company or the well-being and happiness of the employees.
Owners are typically hands on and directly involved with employees, meaning each person truly is more than a number. Shareholders just view you and I as entries on a ledger.[/quote]
Correct which is why the ceo and senior leaders are so important. They are the ones who need to sell that to the shareholders, but instead they go along with the short term gains. Which takes us back to CEO pay - man if you get a really good CEO that can sell a vision, provide long term growth, short term gains and maintain employee morale - they are worth some insane salary.[/quote]Iâd argue that any CEO who is able to do that probably doesnât actually make that insane salary. Look at Costcoâs, for example.
Too bad it would be a massive blow to the ego to admit that the ROI of your multi-million dollar salary isnât there.[/quote]
Worth. It isnât like CEOs say I want this and it magically appears. It gets approved by a board. If a CEO is doing an incredible job then he/she is going to get offers to go other places. A board then has a choice. Really it isnât any different than coaches in college sports. You can hope that they love the school and campus and athletic department and team and elect to stay put regardless of the cash, but you canât count on that to retain your leader.
Also the Costco CEO in 2011 had a 630k or so salary which doesnât seem bad. However he also got 12.3 million in stock options that year so we have to make a distinction is it total comp or salary? I actually like the low annual salary and stock options as it rewards ceos for having a longer vision if they want that stock to be worth anything when they can sell it. Just have to make sure the stock is restricted for 5-10-15 years.
If a CEO is leading a company with low employee turnover, high morale, solid earnings and dividends and stock price growth - you can have a pretty high comp package and still be worth the ROI.
The key is COSTCO is able to operate efficiently and have the right people in place for the jobs and the CEO isnât greedy. In 2011 they had almost 90 billion in revenue and 12 billion in gross income pair that with allowing the stock to grow to the $150 or so it is today I would say that total comp of about 13 million has a solid ROI.[/quote]
A lot of these boards are stacked with insiders. It was nice to see a âindependentâ board movement over the last couple years but I donât know how much of a change itâs made.
Almost all compensation committees for executives are quid pro quo groups. There are endless discussions about it from major, trusted sources if you choose to google them. Quite a few have labeled the issue an epidemic.
My question is: Why isnât non-officer compensation handled the same way?
Hey, NLP, I think youâre worth $1.2Mil/yr as an NNN mod. Now your turn to pay me back.
[quote=âChip Diller, post:31, topic:29556â]Almost all compensation committees for executives are quid pro quo groups. There are endless discussions about it from major, trusted sources if you choose to google them. Quite a few have labeled the issue an epidemic.
My question is: Why isnât non-officer compensation handled the same way?
Hey, NLP, I think youâre worth $1.2Mil/yr as an NNN mod. Now your turn to pay me back.[/quote]
Certainly an issue there. To change that it takes an engaged society, media and stock holders.
This is the component that drives me crazy, especially when these debates shift towards the inevitable âfree market capitalismâ pipe dream talking points that wash up at some point.
The US government are subsidizing corporate profits. A figure just came out recently that up to 150 billion dollars a year is spent on propping up low wage workers through food stamps and medicaid. And then on the front end you have these very same corps sucking at the teet of Uncle Sam for the plethora of economic development subsidies. Tens upon tens of billions of dollars a year. Theres a great website that tracks this stuff. The dollars are staggering.
I donât understand why there is not an appetite for outrage over corporate welfare. People go bat shit crazy at the thought of a person getting 80 dollars a month in food stamps but donât bat an eye over the unimaginable dollar amounts we spend on corporate welfare. Approx 20 percent of the federal budget is spent on Medicaid and public assistance programs directly aimed at poverty in this country. If you think thats to much or not is another debate. But when once you realize that we trip over ourselves to give money to fortune 500âs, effectively enable them to pay their employees less than a living wage, and then bail them out once shit goes south, I donât see how it doesnât make people reach for their pitchforks.
Activist investors certainly donât help matters.
Iâve always looked at it like this.
It is much harder to invest money to make money. It is much easier to not invest and cut costs. This is a result of short term outlooks, quarterly earning reports, etc etc etc.
As for SCKâs comments, no one is being a hypocrite. The current compensation structure doesnât make our 401ks any better. In fact, the short term view probably hurts because people are earning less income from their jobs to invest / spend. All the money hoarded by the top stays there. Even when the Fed is acting like a printing press it is not like everything is sharing in âbenefitsâ. it is being hoarded while regular folks stand on line asking for more like Oliver Twist.
This is the component that drives me crazy, especially when these debates shift towards the inevitable âfree market capitalismâ pipe dream talking points that wash up at some point.
The US government are subsidizing corporate profits. A figure just came out recently that up to 150 billion dollars a year is spent on propping up low wage workers through food stamps and medicaid. And then on the front end you have these very same corps sucking at the teet of Uncle Sam for the plethora of economic development subsidies. Tens upon tens of billions of dollars a year. Theres a great website that tracks this stuff. The dollars are staggering.
http://www.goodjobsfirst.org/subsidy-tracker
I donât understand why there is not an appetite for outrage over corporate welfare. People go bat s*** crazy at the thought of a person getting 80 dollars a month in food stamps but donât bat an eye over the unimaginable dollar amounts we spend on corporate welfare. Approx 20 percent of the federal budget is spent on Medicaid and public assistance programs directly aimed at poverty in this country. If you think thats to much or not is another debate. But when once you realize that we trip over ourselves to give money to fortune 500âs, effectively enable them to pay their employees less than a living wage, and then bail them out once s*** goes south, I donât see how it doesnât make people reach for their pitchforks.[/quote]
Matt Taibbi explains this sort of behavior well in one of his books. He was more focused on regulation, but the gist is the same.
This is the component that drives me crazy, especially when these debates shift towards the inevitable âfree market capitalismâ pipe dream talking points that wash up at some point.
The US government are subsidizing corporate profits. A figure just came out recently that up to 150 billion dollars a year is spent on propping up low wage workers through food stamps and medicaid. And then on the front end you have these very same corps sucking at the teet of Uncle Sam for the plethora of economic development subsidies. Tens upon tens of billions of dollars a year. Theres a great website that tracks this stuff. The dollars are staggering.
http://www.goodjobsfirst.org/subsidy-tracker
I donât understand why there is not an appetite for outrage over corporate welfare. People go bat s*** crazy at the thought of a person getting 80 dollars a month in food stamps but donât bat an eye over the unimaginable dollar amounts we spend on corporate welfare. Approx 20 percent of the federal budget is spent on Medicaid and public assistance programs directly aimed at poverty in this country. If you think thats to much or not is another debate. But when once you realize that we trip over ourselves to give money to fortune 500âs, effectively enable them to pay their employees less than a living wage, and then bail them out once s*** goes south, I donât see how it doesnât make people reach for their pitchforks.[/quote]
Cass you and I are typically at opposite ends - but on this we agree. The govt bailouts of corporations and the public assistance to private entities drives me up the wall.
I could write a book on my thoughts on the subject, but letâs look at what a business is. It is an entity created to make money. Two of the easiest ways to make money is to create goods or services at the lowest cost possible and sale them at the highest costs possible or to sell shares of ownership. The biggest cost to producing products and/or services in most businesses is labor. Therefore, the company is always looking to keep labor costs down through a lower skilled workforce or automation.
By selling ownership to shareholders the company is using their money (loan) to run operations, invest in cost saving technologies, etc. In turn for using investor capital, investors would like to be compensated at the best rate possible. Otherwise, they will pull their funds and invest in other companies. Companies or the people who invest in them are not evil, but are just trying to be better than the next company or person.
If this CEO wants to do right by his people, he should pay them $65,000 and spend the other $5,000 teaching them how to invest and grow their money. The knowledge is what separates the wealthy from the poor. You can increase the minimum wage to $100 and not solve the issue. This is because inflation would rapidly catch up to any gains made by minimum wage increases. The government should invest in teaching money management in the public schools starting at the elementary school levels on through high school. I think the minimum wage should increase in steps to give people some breathing room before inflation catches up, but to raise it $3, $4, or doubling it at once would only hurt the economy in my opinion.
Even still, at the end of the day there will always be wealthy people and there will always be poor people. That is human nature and the way all economic systems work.
This is something I have thought as well. I would say middle-college though. As a college student in NC you are required to take a science with a lab, multiple liberal arts classes, but not one class on personal finance. I have always been a big proponent of this. So many graduates get out of school and donât understand time value of money, how important early savings for retirement, how to read a HUD statement, etc. I was fortunate even to have parents who taught it, but the fact that students are not required to do this is part of the problem. Makes absolutely no sense.
This is something I have thought as well. I would say middle-college though. As a college student in NC you are required to take a science with a lab, multiple liberal arts classes, but not one class on personal finance. I have always been a big proponent of this. So many graduates get out of school and donât understand time value of money, how important early savings for retirement, how to read a HUD statement, etc. I was fortunate even to have parents who taught it, but the fact that students are not required to do this is part of the problem. Makes absolutely no sense.[/quote]
College is great - but these are basic skills everyone needs. I say teach it in middle school right as some kids start getting jobs so that they understand how things work.
I would definitely support teaching money management skills in public schools. I am surprised to find out that very few private schools do it either. Itâs so fundamental to existence in this society, itâs almost like there are people who donât want the masses to make good deciâŚ
yeah, that was headed down a little bit of a snarky road. As anyone who supported football here knows, grassroots movements are hard but essential. I really do applaud this guy for at least trying, and I hope it encourages others to try similar measures. I do agree with the notion of teaching money management skills (for $5k, or whatever). Also, any other training that would improve the company or the lives or careers of employees. Iâd just call that good stewardship.
The odd thing is, itâs the leaders who would or are doing things like this that deserve the greatest accolades, and probably a step up from their peers in pay. A truly good leader is a rare commodity and should be valued. System working in reverse again.