[extropy-chat] You're Fired

BillK pharos at gmail.com
Mon Oct 16 10:49:31 UTC 2006

On 10/16/06, Robin Hanson wrote:
> <http://hanson.gmu.edu/YoureFired.htm>
> You're Fired, Forbes, October 30, 2006.
> In the above OpEd I introduce a wide audience to my proposal to put
> market in charge of whether to fire the CEO.   Not only would this
> add value to companies, it would change the way we think about who
> does and should "run" our major organizations.

I don't really see why random market movements should be used as the
basis for directorial employment.

There are two main criticisms.
1) Stock markets are random.
2) Company directors are mostly PR or insignificant.

The market swings through booms and slumps and some sectors have mini
booms and slumps. If markets were efficient then successful investors
contrary to the herd (like Buffet) could not exist. (1).

Some directors will be lucky to be in the right place at the right
time and some won't.  There are only a very few directors whose
decisions have much effect on company performance. Usually in new,
fast-moving sectors where rapid change is paramount.

The vast majority of company directors are of the type "I've worked 10
years to get my snout into the trough and I'm going to make the most
of it." (Because everyone else does it as well).  Then they
concentrate on PR, keeping their lucrative employment, increasing
their stock options, accumulating huge pension funds, and ensuring
huge payoffs for terminating their employment.

Company staff voting is a much better system for controlling the
excesses of the board. If the company staff are also the shareholders,
you get the best of all possible worlds.  ;)


(1) <http://www.thestreet.com/p/pf/rmoney/barryritholtz/10196814.html>

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