[extropy-chat] Why I am No Longer a Libertarian Either...

[J. Andrew Rogers]

On 7/25/05 10:52 PM, "The Avantguardian" <avantguardian2020 at yahoo.com>
wrote:
> The CEO argubly
> contributes the least to the productivity of a
> company, he is just the face that the BOD sees. Not so
> much for the owner-CEOs like Gates and Branson but the
> "professional" CEOs that hop around from company to
> company looking for the next zero on their bank
> account, those guys are clue-less. They know how to
> schmooze, make excuses, do some creative accounting,
> and fire people and that's about it.


This is just rehashing popular misconceptions of the role and character of
the typical CEO, a Hollywood caricature far removed from reality.

The vast majority of CEOs at companies big and small are worth every penny
of what they are typically paid, which is much less than the few outliers
that people think is "normal" -- $250k is in the ballpark of average CEO pay
in the US.  Part of the problem is that few people understand what the job
of the CEO is as a practical matter.  In a modern company, the COO is the
person responsible for the direct management of the company; if the CEO is
directly involved in the management of the operation, they aren't doing
their job.  The CEO does all that other stuff, including "schmoozing", but
if one understands the ROI a good CEO delivers as a function of his job, it
is easy to see why the investors and BoD is willing to pay them what they
are paid.  A CEO is responsible for capital management, in the most abstract
sense.


Professional company-hopping CEOs that do not deliver are all but
non-existent.  Unlike regular employees, they are subject to civil and
criminal liability, and frequently face as much with relatively minor
provocation.  After the dotcom crash, several dozen Silicon Valley
executives went to prison for malfeasance of various types, and ten times
that number were sued into bankruptcy.  Mostly people have only heard of a
few, like the Enron folks. There is a perception that there is no
consequences for bad behavior among "C-level" executives, but that is
patently untrue.  As someone who is close to the business, it is routine to
hear about so-and-so executive being sent to prison or some other Silicon
Valley under-performer being sent to the poorhouse.  Just because no one
ever hears about it does not mean that justice does not happen.

Over the long run, in business only the straight players survive.  You can
be as ruthless as you want to be, but you have to play straight and be very
smart or it will bite you sooner than later.  Stupidity and buzzword
compliance gets selected out of the gene pool very quickly in such a
hypercompetitive environment. The very idea that business is led by grossly
incompetent executives in the typical case is contradictory with the readily
available evidence prima facie, but it is ever so popular to paint people in
capitalist enterprise with the few spectacular outliers in their midst.

The whole notion reeks of anti-capitalism propaganda and betrays a basic
unfamiliarity with the reality of the business.


J. Andrew Rogers