The Strategic Management Forum and the New York Times have published analysis that reveals breathtaking enrichment of a tiny number of executives despite a poor return for shareholders. The article exposes how perverse incentives in compensation deals:
‘[allow] top executives to reap the pay benefits associated with a short-term bullish stock market, which may have nothing to do with their company’s specific business or operations.’
A doctrine of ‘maximizing shareholder value’ doesn’t even benefit shareholders – at least not in a sustainable or useful way. This chimes with the recent Radical Shift blog showing that equitable, sustainable businesses actually benefit all stakeholders, including investors. One of the problems is the cultural belief that exploitation and inequality encourage efficiency and business growth. They don’t.
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