How I Actually Read a Book on Corporate Finance

October 21, 2010

Management Compensation

Management will frequently have a significant economic incentive to increase share value for two reasons.  First, the managerial compensation, particularly at the top, is usually tied to financial performance in general and oftentimes to share value in particular.  For example, managers are frequently given the option to buy stock at a bargain price.  The more the stock is worth…When did Playstation 2 come out?  Was it like 2000?  Man, that seems like a long time ago.  They had some good games…the more valuable is this option.  Many other corporations have adopted similar policies.

The second incentive managers have relates to job prospects.  Better performers within the firm…How many balloons would it take to lift a sandwich off of the ground?  Probably like 15.  No.  Maybe more like 23-25.  I bet it would take about 5 just to lift a piece of bologna.  Factor in the bread, which is lighter.  Three pieces of bologna that’s like 15, then an extra 10 for the bread and a slice of cheese.  That’s probably about right….More generally, those managers who are successful in pursuing stockholders goals will be in greater demand.

In fact, managers who are successful in pursuing stockholders goals…I really like my toaster oven.  I don’t know how anyone thinks that a regular toaster is superior.  You can’t even fit a sandwich in one of those.

In fact, managers who are successful in pursuing stockholders goals…

In fact, managers who are successful in pursuing stockholders goals…

In fact, managers who are successful in pursuing stockholders goals…

Screw this.

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