[揽瓜阁精读] 197.CEO的表现和公司利益

Quntansica

P1. CEOs are often driven by short-term personal interests than by the long-term good of their company.

→board should link theexecutive compensation to the targets that:

-        cannot be easily gamed by the CEO

-        can be achieved only if he creates actual and sustainablevalue for the company

→meet targets = miss targets

However, （实际上）CEOs meet＞miss their targets.

P2. The performance targets of CEOs are often based on a single metric such as quarterly profitability or earnings per share.

Shortcomings： can be easily manipulated by CEOs

In contrast, 3 to 5 performance targets

→Miss target=excel target

P3. Boards often determine their CEO's performance goals based on the company and sector growth forecasts provided by external analysts and the CEO himself.

→Q1. CEOs lowball forecasts to get easily achievable targets→prevent their company from growing to its full potential.

→Q2. no bonus below the minimum performance threshold for their CEOs：

-         rewards rise steeply until the target is reached;

-         rewards for performing beyond this target grow much more slowly and eventually taper off.

       →CEO rarely strives for them.

Conclusion：The result of all this is a sated CEO but a stunted company.