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by 0xDEAFBEAD 1005 days ago
If you were a major shareholder in a company, would you favor a CEO who ran it into the ground?
4 comments

If I am a faceless pension fund that is going to earn short term on this much better, and be free to walk away and do the same thing to another company?

Sure.

This is exactly the same playbook as with private equity - the point is to make the shareholders richer as fast as possible, and long-term strategies do not pay out as fast while possibly introducing longer term risks.

For short term profit that I can walk away with? That is very different from building long term value. Both are profit. One profits from creation and has long term recurring benefits, the other profits from extraction, which only happens once. Both building a fire and building a house profit from a supply of wood. But they are pretty different in terms of long term pay off.
Please see the story of Jack Welch CEO of GE.
Can you elaborate? Wikipedia says Welch took GE from a market cap of $12 billion to $410 billion over the course of 20 years.
If I am a major shareholder, I would prefer a quick profit because I can then invest it somewhere else and have higher overall profits.