Who owns the companies? Shareholders, or funds? I think you need to go look at a few large companies and figure out whether there is a "free market" when it comes down to corporate governance.
Who owns the companies? Shareholders, or funds? I think you need to go look at a few large companies and figure out whether there is a "free market" when it comes down to corporate governance.
And whose fault is it when those company suck in corporate governance? It falls squarely on the shareholder for not voicing their concerns in general meetings and not vote with selling their stock holdings. Regardless who has the most voting power, some companies may be structured so that few people owns controlling shares with most voting powers. But shareholders can always vote with selling their stock, that's free market right there.
Phokus
Lifer
- Nov 20, 1999
- 22,994
- 779
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Kid, read up on the following relevant topics before getting back to me, it's obvious you're an intellectual lightweight in this discussion:
1) Externalities
2) Interlocking Directorates
3) Principal-agent problem
4) Golden Parachutes
5) Information asymmetry
Maybe there's a book called 'Baby's first look into how markets work in the real world' that you can read or something.
Take the Housing and mortgage problems, if you have a problem with too many mortgages then the solution should be to increase the interest rate for mortgage loans, instead, we have lowered the prime rate. How is that suppose to slow down our mortgage problems? All we do when we artificially mandate lower interest rates is prolong our suffering or cause the dollar to fall in value causing the cost of food and living expenses to increase.
I don't need any more books. My MBA and CFA taught me plenty. Now tell me why investors keep buying stock of companies that give CEO bad packages or fill board of directors with people without stake in the company? CEO compensation and board of directors are all public information, if you do your homework, read 10k's (Get it free at http://www.sec.gov/edgar.shtml), you'd know all that.
Tell me with your infinite wisdom why it's better for governments to bailout investors who don't do their homework and keep investing in companies with bad corporate governance, (oh by the way, wasting our hard earn tax money doing that) instead of let investors learn their lessons the hard way.
Why does government have to intervene like set CEO compensation BS. If shareholder's don't like it, sell the freaking stock, and to the rest who don't own stock or is somehow a stakeholder of the company, the CEO compensation is none of ur f'ing business.
When did you get your CFA charter? You never mentioned it before and, IIRC, asked me about getting it.
Compensation may be public record, but when was the last time you've seen it proxy voted? If an average of 85% of float is institution owned and institutional stock isn't directly voted, or even public notice of proxy vote, then how can somebody even fight it? How can you, as a 401k investor, stop a portfolio manager from investing in such stock?
You can't. That's why your whole premise is shit and why I don't even think you've got your charter.
Passed my level 3 last July. Are you telling me that mutual funds and institutions don't vote and aren't required to disclose their proxy votes to their investors? You telling me investors don't have any choice of funds that invest in companies with better corporate governance or reasonable CEO compensation? There is even funds out there with "green" companies, and bunch of other "socially responsible" funds for investors to pick. You telling me it's hard to find funds that make corporate governance part of strategy? And I strongly believe good and transparent corp. governance should be part of every fund with capital preservation strategy.
Oh and by the way, I never said the market works perfectly. I have said numerous time in this thread alone that the real market is not perfectly rational/efficient. What I want to point out is there is mechanism. What is needed is more transparency and more dissemination of info, and not more gov. intervention and control like some idiot clams.
Sorry mate, you may think your the god of finance and investment in this tech forum but there are plenty ppl here who knows one thing or two about how the market works.
Sorry, but you don't pass the exams in July. You take them in June, find out you passed in Aug/Sept, apply for and usually get accepted in Oct/Nov/Dec, and have your name published in Dec/Jan/Feb in the WSJ. So that doesn't wash. Don't give me BS about screwing up July/June, because if you've taken those 3 exams, you *KNOW* for the rest of your life it's in June. You *KNOW* it is June because you've wasted Memorial Day weekend studying your ass off. You *KNOW* it is in June because all of May you've worried about how much you've studied. You *KNOW* it is in June because the remainder of June, July, and August are some of the most never-wracking in your life.
When was the last time you've gotten the proxy statements for a compensation vote? I look at each and every statement I get and I have *NEVER* seen that for each company held in the portfolio.
What fund do you know of, in your average 401k portfolio, that gives you access to the compensation information and the ability to opt-out of that stock? I've had 3 different plan admins (Pru, Fidelity, Etrade) and I've *never* seen that.
What mutual fund offers opt-out for stocks? Wow, not one fucking single one! Sure, you can have them for specific purposes, but not ones for corporate governance. I don't even think you have an inkling what you're talking about.
Show me one mutual fund, then show me where that mutual fund is an option for your average investor.
When it comes down to it, since 85% of float is inst. owned and you have a limited ability to pick stocks and your plan admin doesn't notify votes before they occur and you have no direct feedback in the votes and you cannot buy/sell individual stocks out of a portfolio, your ability to change the investments to change the vote or influence compensation is exactly 0.
I may not be a finance god, but I sure as hell am more practical and knowledgable than you.
Phokus
Lifer
- Nov 20, 1999
- 22,994
- 779
- 126
Cute, another self conscious idiot who feels compelled to present their credentials (one of which might be fake :laugh
) when they have their ignorance exposed. If bad CEO compensation is systemic (due to interlocking directorates, among other things), what are you supposed to invest in? I (like most people) don't have a chance to vote for shit because all my stocks are tied up in my 401k Mutual funds. As LK alluded to, the vast majority of stock is owned by institutional investors who don't exactly seem to have much of an incentive to rock the boat and start getting rid of board members now do they? Do their homework? Do you realize only a couple of economists and a handful of investors in the whole country were able to foresee the subprime mess? Good luck trying to figure that shit out based on their balance sheets, you'd have to be nothing short of clairvoyant for even the most seasoned investor to forsee such an event.
Why should we bailout the banks? Ever heard of externalities, child? Hey, i don't like bailing out the banks anymore than you do, but it's the least worst option we have. Your infantile free market idea of punishing the investors (and who gives a fuck about the investors, the CEOS already got their bonuses out of this shit) is retarded considering you're punishing the whole fucking economy by letting the credit market freeze up, destroying the world economy along with the investors of these companies.
Why should the government intervene in executive compensation? I don't believe i ever said that, i just pointed out what a mess it is right now, so don't put words in my mouth. But you know what, other countries actually have saner levels of exec compensation compared to us (I believe our ratio for CEO to average worker pay is the highest in the world). For example, some European countries have a 2 tiered board system (1 being a supervisory board that represents the interests of the shareholders and employees and this board sets compensation). Many countries don't allow the chairman of the board and the ceo to be the same person. When i was at IBM, the CEO, Sam Palmisano, was BOTH CEO and Chairman of the board. How could the board be impartial to his salary when he's also the chairman?
Oh so now I have to prove my qualification on an Internet forum....haha that's a first. Don't you think if I wanna lie about my qualification, I'd at least get the date right when you can google that in like 5 sec? So what if my brain was thinking June but my finger typed July, so sue me.
There are many ways mutual fund investors can do something about corporate governance. Morningstar give funds this stewarship rating or something that rate's a fund's governance. Yes it's not a direct rating of companies' governance, but it rates how fund managers watch over investor's interest, which means investing responsibly in those companies with good governance. And institution investors does have fiduciary duty to their individual investors, and it's their responsibility to make sure companies in their portfolio have good corporate governance. And just like selecting individual stock, investors can select funds that do their job and stay away from funds that don't. while you cannot opt out individual stock, you can opt of of the whole fund if the fund keep taking companies with bad governance practice. All you need is a quick glance of the companies in the portfolio, and investment firm like fidelity have ratings like ESG (Environmental, Social and Governance), to give you a good idea what the portfolio look like.
Wow, just the dodge I thought you'd come up with. You're no charterholder.
What are the criteria? How good is Morningstar at keeping up on the data? Who says Morningstar isn't involved in the same problem? They are an interested party.
Sure, they can select funds, but without direct and open options for changing corporate governance they cannot directly influence the situation. Furthermore, without the ability to directly buy/sell the underlying stocks in the portfolio, they do not even have that option. When it comes down to it, most of the funds provide the investor no ability to guide their corporate governance situation and there is no reasonable way for investors to do so. Considering the wide spread problem no funds would be available!
Sorry, but your arguments are pathetic and lack any form of logic. You cling to some absurd notion of "free markets" when it comes to a rigged and ridiculous system of interlocking boards, investment manager blowjobbery of BODs, and the pathetic nature of investor awareness and ability to actual vote their shares.
Any reasonable and logical person can see this.
Yup, sadly common shareholders have nearly zero say. But yea, you can "vote with your shares" and sell out of all stocks I guess.
It's sick how the world of management, BOD, and fund managers is a bunch of circle jerk bullshit that puts fiduciary duty to the shareholder last when it comes to management pay packages.
But that is why that is my goal to get to that point so I can milk it for all it's worth.:evil:
It's sick how the world of management, BOD, and fund managers is a bunch of circle jerk bullshit that puts fiduciary duty to the shareholder last when it comes to management pay packages.
But that is why that is my goal to get to that point so I can milk it for all it's worth.
:evil:
Phokus
Lifer
- Nov 20, 1999
- 22,994
- 779
- 126
Originally posted by: JS80
Yup, sadly common shareholders have nearly zero say. But yea, you can "vote with your shares" and sell out of all stocks I guess.
It's sick how the world of management, BOD, and fund managers is a bunch of circle jerk bullshit that puts fiduciary duty to the shareholder last when it comes to management pay packages.
But that is why that is my goal to get to that point so I can milk it for all it's worth.
I wish more republicans were like you... a scumbag POS but an honest scumbag POS
Heh, that's fine if you don't believe I am a CFA charterholder. Like I need someone on the internet to approve my qualification.
It's sad to see people on the Wall St to look down at corporate governance and dismiss the investor's ability to ensure proper corporate governance. Here at a multilateral development financial institution I work, corporate governance is one of the top, if not the top criteria when we determine where to invest our money. I haven't read a Mutual fund prospectus for a while (I build my own portfolio even my 401k using www.folioinvesting.com), but I don't believe how any responsible fund don't discuss what they do and how they ensure the companies they invested in have proper corporate governance. And like I pointed out already, there are easy ways for investors to look at each company in the fund they invested in and what their governance ratings. While investors don't have ways to pick and choose individual stock, they can easily pick funds consists of companies with better overall goverance. In addition, if a big percent of individual holders voice their concern to fund managers, the issue will be recognized.
Again, I never claim that corporate governance work perfectly. And by talking to you who is supposedly a Wall St. insider, looks like corporate governance isn't taken seriously at Wall St., by fund managers who suppose to have fiduciary duty to individual investor, or by investors who are not asking for more input and influence. The process is there, it's just not being exercise or done. Well, hey, guess you Wall St. ppl have no one to blame but yourself with this mess and companies failed because of the lack of governance. While we at other institution with our approach keep our money safe and sound. That's how free market suppose to work.
Phokus
Lifer
- Nov 20, 1999
- 22,994
- 779
- 126
I don't know why the fuck rchiu or anyone would put so much faith into a private 3rd party rating agency anyway. After the debacle with Moody's and their involvement in the subprime/CDO mess where they rated all that steaming pile of shit with a AAA rating (while pocketing a healthy fee every time they did), even the staunchest free market defender couldn't defend that.
Hell, they were even involved in blackmailing other companies that didn't pay for their ratings: http://www.washingtonpost.com/...s/A8032-2004Nov23.html
I'm curious as to how these fucksticks aren't in jail yet.
Kind of a tangent here, but i remember a few years arguing with some idiot libertarians who thought it would be a great idea to get rid of the FDA and instead have 3rd party research/rating agency to test the effectiveness of drugs for us and test our food supply.
Free Market fundamentalist don't just want to destroy our financial markets, they want to poison us too! :thumbsdown:
Heh, this post examplified your way of thinking. Just because Moody f'ed up in rating CDO's, all rating system is f'ed up too? Do you know how difficult it is to value CDO's and assess its risk? For governance rating, even a Wall St. outsider like me can pull up publically available info and give a rating based on tangible facts. The rating agency just save people time from gathering all the info. Governance rating itself is simple and straight forward as long as the rating mechanism is consistent. Rating CDO and rating governance is like night and day and just because rating agency failed rating CDO it does not mean their all other rating fail as well.
It's same with your logic on free market. Just because the past 18 month we suffered a pretty f'ved up market, the free market capitalism that helped the US to become #1 economy in the world over the last 50+ years is suddenly a failure?
Show me another market system that gives better result than the US capitalism over the last 50+ year and we can start talking who is poisoning who.
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