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Why Bad Directors Aren't Thrown Out
An anonymous reader writes "For publicly-owned companies, the CEO gets most of the spotlight. If the company is successful and the stock goes up, the CEO gets the credit. If the company stumbles, the CEO gets the blame. But an article at the NY Times points how the board of directors for most companies seem to get a free pass, even when their decisions or their CEO selections consistently go wrong. 'Last year, there were elections for 17,081 director nominees at United States corporations, according to the service. Only 61 of those nominees, or 0.36 percent, failed to get majority support. More than 86 percent of directors received 90 percent or more of the votes. Of the 61 directors who failed to get majority approval, only six actually stepped down or were asked to resign. Fifty-one are still in place, as of the most recent proxy filings.' The article uses Hewlett-Packard as an example; the past several years have seen poor CEO choices, the abominable Autonomy acquisition, and billions in write-offs for other failed endeavors. Yet HP's directors were all re-elected."
Sure, corporate interlock isn't as bad as it once was (don't believe anybody who claims it doesn't exist anymore) but the real reason is that the whole system is an asshole club based on friends and schmoozing. We don't have a mechanism to put good people in charge, and the people running things don't want it that way.
There isn't much social mobility in this country. Directorships and positions like them are just part of a big scam to perpetuate dynastic transfer of wealth.
The system is rigged.
Could it be because capitalism is just an excuse to get the idiots at the bottom to think that Aspiration Will Get You Up There while those at the top are just a bunch of layabouts scratching each others' backs and mostly giving not a fuck about anything beyond making enough money to buy another yacht before they receive their golden parachute?
The world runs thanks to careful centralised regulation and provision of education and research combined with small, agile businesses - and in spite of behemoth corporations.
they're your ruling class silly. Your masters. They own you. Sure, you could do something about that. But you'd need a lot of power. Somethin' like a government body. And that'd be socialism (cue dramatic music).
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Yes. The idea that "If the company stumbles, the CEO gets the blame" IS news.
If the company does great, the CEO gets a bonus for having made great decisions.
If the company does poorly, the CEO needs a bonus to make the touch decisions.
If the company does about even, the CEO needs a bonus 'to retain top talent'.
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So I make a very ordinary salary as a software engineer, but could probably raise it by 25% by changing jobs but not venturing too far outside my comfort zone.
However, I've got friends who went from earning roughly as much as I did, to quadrupling what I'm making, simply because they play fast and loose: lying about past salaries, standing job offers, etc, to get raises; and taking jobs they're not always qualified for, simply because they're good at bullshit.
What this is REALLY saying, is that they're doing well because the free market values liars and bullshitters. The people who are the most profitable to employers however, are the people whose personalities and personal moral code precludes them from earning too much, allowing employers to get a bigger spread between 1) what they pay employees, and 2) what those employees contribute to their bottom line.
The reality is a bit more complex than I make out (bad directors persist, because big institutional investors want stability and don't want to rock the boat; nepotism (sometimes a good thing!!); information asymmetries everywhere, etc., etc.). Simply put, being a slimy, lying cunt pays -- and not everybody can be a director, because not everybody has the stomach to do what they need to do to get there.