I think that system of awarding managers and CEOs is fundamentaly wrong and that it will finally come to a dead end soon. Principal/agent problem has been present from the begining of the capitalism, but I think that current crisis just brought it on the "main stage".
The whole system of awarding managers solely on the increase in EPS seems awfully wrong to me. I mean, I am the shareholder, so it seems natural for me that I will give the highest bonus to the manager who increases my wealth, and the EPS seems the most appropriate measure. But... Am I doing the right thing?
If I am the shareholder who wants to stay in business in the long run and who is paying the bills from the income of that business, I should award the manager who is expanding my business, opening the new subsidiaries, bringing me new buyers, increasing my net income etc. I should pay the highest bonus to the visonary and the leader.
Instead, in the current system, I am awarding financial manipulator who increases the value of my stock by using financial gimmicks, or even some more drastic measures like chopping-off companies (5 smaller worth more than one big) or cutting the costs by closing the plants in US and moving them to China or Taiwan. Nothing strange if I am short term investor who cares only about "buying for 2 and selling for 3". That way, prevailing greed had turned the manager, leader and visionary in nothing more than inflation pump.
I know, there is nothing wrong in the individual strive for wealth, but we, as a society, should ask - at what price? What is the long term price of actual greed? How sustainable is the popular cost-cutting policy of closing plants from Chicago to New York and transfering the production lines to China? If we close them all, who is going to buy that same products if the entire US labor force is on wellfare and broke?
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