Typical Corporate Greed.. Corporations feel the deserve special treatment. My wife and I pay about 26% of our income to taxes. How is it that these corporations feel they deserve to avoid paying the same in taxes?
The money was earned in a foreign country, and taxes were paid on it. What they are trying to avoid is paying taxes twice. Thrice, actually, since once they return it to consumers, another tax is paid.
By the way corporations are not, and cannot be greedy. They do not have emotions. People are greedy. You thinking Apple should give the money that has been rightfully earned for its shareholders to you (that is what your government is, you know) instead of keeping it for itself and its owners, is very greedy on your part. How do you have more right to the Apple shareholders' money than they have to it? Seems they earned it by providing the capital, they should get to keep it, not you.
So Apple needs a 30% cut app developers hard work, but wants to only pay 5% tax for a whole year? I would bet anything that these corporations once again get their way, and that this gets extended for more than a year. I would also like a "Tax Holiday" for next year, and I promise to buy Apple products with the extra cash in my pocket. No seriously I Promise.
Greedy pricks insist on taxing overseas profits based on greed and nothing more. Even worse, the selfish bastards dont care if it drives jobs overseas, as long as their job is secure.
Stop it with the judgements. I know its a forum, but those comments do nothing to add to the intellectual conversation.
The government could use the money to improve public education and scholarship opportunities so Apple has a better domestic talent pool to hire from.
Yes, if the government would ONLY spend some more money on public schools! That way our poor, underfunded children (who only get more money per pupil than anyone, for TERRIBLE (and worsening) performance) can finally get a break.
Seriously, do you just read the politicians' speeches and assume that everything they say is true? Sheesh.
The presumption for corporate taxes is that corporations really don't pay taxes, individuals do -- because any taxes are passed onto employees with lower wages, or to consumers with higher prices.
I think Apple should look at the FairTax (fairtax.org). It replaces our current tax system with a consumption tax (in a progressive way -- it's a tiny bit more complicated than a straight national retail sales tax. It would replace corporate taxes, social security taxes, and income taxes with a simple retail tax -- and it was designed to generate the same amount of revenue for the government. The end result is that you keep all of your paycheck, the IRS goes away, and you pay taxes when you buy retail. It's not a VAT, in that it just charges the final product - so business-to-business transactions are left untaxed.
FairTax did a study on the effect of this, and it would bring a lot of that overseas profit back onshore, which as it's redistributed and spent, would be taxed. It would also tax foreign products at the same rate as domestically produced products, which is not what happens today, so it would level the playing field and help reduce the trade deficit.
It is definitely not something Washington would push on it's own, but with enough word of mouth - we could make this a reality.
I agree! However, i dont think this will happen. There are thousands of people employed by the IRS and thousands of accountants who make their living through tax loopholes. There would be a revolt (metaphorically) and possibly a strike of IRS workers. Millions of unprocessed checks and an unfunded government are not a good thing.
I mean, everyone else, Steve Ballmer, for example, pay WAY less than 25% of their revenue in tax.... only poor people do such ridiculous things.
And it answers your question: corporations ' money is very rich people's money, not "some unknown and faceless entity"'s money. Those people pay very low tax on their income, why should corporations which pay them dividends pay huge taxes, which means less dividends?
Wow, so I guess I'm a very rich person. And so are most people here! Amazing!
It must be nice to have no clue about the world. The people who own public corporations are EVERYONE, just about.
Yes, if the government would ONLY spend some more money on public schools! That way our poor, underfunded children (who only get more money per pupil than anyone, for TERRIBLE (and worsening) performance) can finally get a break.
Seriously, do you just read the politicians' speeches and assume that everything they say is true? Sheesh.
Good sentiment. There is a big issue with the theory that throwing money at a problem will make it go away. However, just because that is his belief (erroneous or not) doesn't make him unintelligent.
Wow, so I guess I'm a very rich person. And so are most people here! Amazing!
It must be nice to have no clue about the world. The people who own public corporations are EVERYONE, just about.
The interesting thing about everyone owning corporations is that, in some cases, the board can actually be overruled by the stockholders. However, since it is unlikely that 40+% of stockholders would actually give a concise and unilateral opinion, the company is left with artificial control.
The purpose of management is to exploit each employee to the greatest potential and earn a profit for the corporation.
The CFO has the obligation of finding any and every way to avoid paying anyone anything they don't have to.
From hourly wages, to benefits and corporate taxes, it's all the same. Pay as little as the law allows.
When you want to capitalize here and your capital is elsewhere you ask for exceptions to the tax laws.
It's been going on for decades. Apple is one of the many, many corporations to do this.
Their current success makes using their name in the headline good news, hence profit for those that sell news.
It also provides hits for this site and allows greater sales of advertising on the site.
It's the current state of capitalism in this country. No real news here at all.
The purpose of management is to maximze shareholder value. Value is not exclusively defined as profit, hence many companies are involved in charitable activities because the owners find that valuable, as just one example. Second, many successfull managers believe trying to wring every drop out of the employees and such backfires and that a happy healthy workforce and a possitive relationship with government entities, communities etc. leads to higher long term earnings and therefore better maximizes shareholder value.
"Solipsism: In philosophy, a view that maintains that the self is the only thing that can be known to exist. It is an extreme form of skepticism. The solipsist sees himself or herself as the only individual in existence...."
Epic. It's like the matrix. I know I exist, but is that person real or a program?
The purpose of management is to maximze shareholder value. Value is not exclusively defined as profit, hence many companies are involved in charitable activities because the owners find that valuable, as just one example. Second, many successfull managers believe trying to wring every drop out of the employees and such backfires and that a happy healthy workforce and a possitive relationship with government entities, communities etc. leads to higher long term earnings and therefore better maximizes shareholder value.
And yes I did go to business school.
While that is the technical purpose, how would you comment on how the effects outside (i.e. personal ambition, government, etc) of the business market affect those decisions?
Just interested.
( by the way, i love how every conversation not related to android turns into a philosophical or societal discussion) (the android ones turn into slap fights)
Good sentiment. There is a big issue with the theory that throwing money at a problem will make it go away. However, just because that is his belief (erroneous or not) doesn't make him unintelligent.
If you think simply throwing money at a complex problem will make it go away, and that there are no costs in trying to do so, yes it makes you unintelligent.
If you think simply throwing money at a complex problem will make it go away, and that there are no costs in trying to do so, yes it makes you unintelligent.
except that wasn't the comment you responded to. He stated the funding for the issues (importation of cash) and it was merely made as a side comment. Though I believe the companies would choose not to bring in the money otherwise, the comment itself was not meant to be a logical argument necessarily, just an idea.
The trickle down theory doesn't work. Why because nobody forces the rich to share the wealth. If a tax holiday is given, there will be guarantee that stockholders will get a dividend. Apple isn't going to give one.
If only there was more force in this world. You'd better hope nobody ever decides you've got more money than you need, my friend.
The trickle down theory doesn't work. Why because nobody forces the rich to share the wealth. If a tax holiday is given, there will be guarantee that stockholders will get a dividend. Apple isn't going to give one.
You make it sound like the rich (and I hate that word because it is so vague) should be punnished for making money. If so, what incentive would there be to work hard and advance society?
Oh the irony....Apple (and others) not wanting to pay 30%.
It's not ironic. NOBODY wants to pay more money than absolutely necessary for anything. That's the amazing thing that makes capitalism works. Whining crybabies want there to be laws that protect them from their employers who, in their minds, are trying to pay too little for their services. Companies on the other hand want protection from having to pay their workers more than they are worth. The tug of war between the two sides ensures that all workers are paid fairly, relative to their peers. A worker with skills more valuable to society as a whole is paid more than one with less valuable skills. That is, until the government steps in.
When that happens, someone with less marketable skills gets paid more than they should, and someone with more marketable skills gets paid less than they should. Because unskilled dummies are a larger part of the workforce (and voting world) than highly skilled ones, societies that lose their will to compete tend to trend towards what the USA and France are today - socialism. In socialism, the more poorly skilled do better than they would have otherwise. The most highly skilled do far, far worse. The net result is that society is worse off, because 100s of thousands of people spend their whole lives merely moving the shells around from person A to person B, instead of doing something to advance society.
It's quite sad, really, and especially when you can watch it happening in slow motion.
While that is the technical purpose, how would you comment on how the effects outside (i.e. personal ambition, government, etc) of the business market affect those decisions?
Just interested.
( by the way, i love how every conversation not related to android turns into a philosophical or societal discussion) (the android ones turn into slap fights)
One of the biggest issues in corporate governance is how to allign Management's interests with the shareholders' interest. There is no simple answer. Lets assume a simplest of scenarios where owners only care about money and nothing else....
You can pay an anual bonus based on accounting metrics like profits. The problem is this can encourage a manager close to retirement to shoot for short term profits over long term profits. No investment in R&D, that costs money now, and the profits wont hit for years! It also creates a reward for cooking the books. And so on....
A much better solution is to give the managers stock options, or so we thought for a while. If the shareholders stock price goes up, so does the value of managements options. Wallstreet takes a longer term view and will (often) frown upon management teams that sacrifice long term profits for short term gains, and also the option terms are typically 5 or 10 years so management has to have a longer time horizon to cash in. On the downside, they still find ways to game the system, like backdating their options or managing wall street perceptions, sometimes illegally. There is also the issue that an option does not have the same risks as a share of stock, just the same reward. Management with options will have an incentive to take bigger risks than the shareholders would, knowing that they make a ton if they hit a home run and lose nothing if they strike out. This, along with a bonus structure that rewarded risk played a huge role in the Enron failure. The fraud that made the press was simply an attempt to cover up what had already gone sour from a poor reward scheme. Same issue for the investment banks.
So now what? Boards need to be vigilant and shareholders need to hold boards accountable. As I said even with a simple goal like make money, there is no simple way to keep managers perfectly aligned with shareholder interests. Reward sytems for management need to provide incentives for good behavior and disincentives for bad behavior, but there has to be oversight to make sure the system is not gamed, and action is taken if it is. The companies that do this well have a big long term competitive advantage. Many professional investors (including Buffet) put a big emphasis on corporate governance, more so than historical financial results.
It's not ironic. NOBODY wants to pay more money than absolutely necessary for anything. That's the amazing thing that makes capitalism works. Whining crybabies want there to be laws that protect them from their employers who, in their minds, are trying to pay too little for their services. Companies on the other hand want protection from having to pay their workers more than they are worth. The tug of war between the two sides ensures that all workers are paid fairly, relative to their peers. A worker with skills more valuable to society as a whole is paid more than one with less valuable skills. That is, until the government steps in.
When that happens, someone with less marketable skills gets paid more than they should, and someone with more marketable skills gets paid less than they should. Because unskilled dummies are a larger part of the workforce (and voting world) than highly skilled ones, societies that lose their will to compete tend to trend towards what the USA and France are today - socialism. In socialism, the more poorly skilled do better than they would have otherwise. The most highly skilled do far, far worse. The net result is that society is worse off, because 100s of thousands of people spend their whole lives merely moving the shells around from person A to person B, instead of doing something to advance society.
It's quite sad, really, and especially when you can watch it happening in slow motion.
Exactly! it's the very thing that causes its own issues in society. People see they can work hard and get paid money, or not work hard and... still get paid about the same amount. Its why socialist and comunist systems (not that we are anywhere near that yet) don't work, because they undervalue any desire to advance as a society, by overvaluing mediocrity.
One of the biggest issues in corporate governance is how to allign Management's interests with the shareholders' interest. There is no simple answer. Lets assume a simplest of scenarios where owners only care about money and nothing else....
You can pay an anual bonus based on accounting metrics like profits. The problem is this can encourage a manager close to retirement to shoot for short term profits over long term profits. No investment in R&D, that costs money now, and the profits wont hit for years! It also creates a reward for cooking the books. And so on....
A much better solution is to give the managers stock options, or so we thought for a while. If the shareholders stock price goes up, so does the value of managements options. Wallstreet takes a longer term view and will (often) frown upon management teams that sacrifice long term profits for short term gains, and also the option terms are typically 5 or 10 years so management has to have a longer time horizon to cash in. On the downside, they still find ways to game the system, like backdating their options or managing wall street perceptions, sometimes illegally. There is also the issue that an option does not have the same risks as a share of stock, just the same reward. Management with options will have an incentive to take bigger risks than the shareholders would, knowing that they make a ton if they hit a home run and lose nothing if they strike out. This, along with a bonus structure that rewarded risk played a huge role in the Enron failure. The fraud that made the press was simply an attempt to cover up what had already gone sour from a poor reward scheme. Same issue for the investment banks.
So now what? Boards need to be vigilant and shareholders need to hold boards accountable. As I said even with a simple goal like make money, there is no simple way to keep managers perfectly aligned with shareholder interests. Reward sytems for management need to provide incentives for good behavior and disincentives for bad behavior, but there has to be oversight to make sure the system is not gamed, and action is taken if it is. The companies that do this well have a big long term competitive advantage. Many professional investors (including Buffet) put a big emphasis on corporate governance, more so than historical financial results.
So in other words, people need to give a c***, otherwise they are just screwing themselves over. But not just one person, everyone collectively.
On a completely unrelated note to this forum, gold, commodity or speculation now that 70% of gold mined is sold to investors?
So in other words, people need to give a c***, otherwise they are just screwing themselves over. But not just one person, everyone collectively.
On a completely unrelated note to this forum, gold, commodity or speculation now that 70% of gold mined is sold to investors?
Yep, if no one gives a crap, bad things will soon happen. All but guaranteed.
Gold has not behaved like a comodity historically nor should it be expected to now. There is limited demand for the actual use of gold, relative to supply and production. We can have a copper shortage, an oil shortage or a cotton shortage. There is plenty of gold for all non hording needs. There are much better investments to make if you are afraid of inflation, on the other hand, there is plenty of money to be made in speculation too.
Comments
Typical Corporate Greed.. Corporations feel the deserve special treatment. My wife and I pay about 26% of our income to taxes. How is it that these corporations feel they deserve to avoid paying the same in taxes?
The money was earned in a foreign country, and taxes were paid on it. What they are trying to avoid is paying taxes twice. Thrice, actually, since once they return it to consumers, another tax is paid.
By the way corporations are not, and cannot be greedy. They do not have emotions. People are greedy. You thinking Apple should give the money that has been rightfully earned for its shareholders to you (that is what your government is, you know) instead of keeping it for itself and its owners, is very greedy on your part. How do you have more right to the Apple shareholders' money than they have to it? Seems they earned it by providing the capital, they should get to keep it, not you.
So Apple needs a 30% cut app developers hard work, but wants to only pay 5% tax for a whole year? I would bet anything that these corporations once again get their way, and that this gets extended for more than a year. I would also like a "Tax Holiday" for next year, and I promise to buy Apple products with the extra cash in my pocket. No seriously I Promise.
It must be bliss.
Greedy pricks insist on taxing overseas profits based on greed and nothing more. Even worse, the selfish bastards dont care if it drives jobs overseas, as long as their job is secure.
Stop it with the judgements. I know its a forum, but those comments do nothing to add to the intellectual conversation.
The government could use the money to improve public education and scholarship opportunities so Apple has a better domestic talent pool to hire from.
Yes, if the government would ONLY spend some more money on public schools! That way our poor, underfunded children (who only get more money per pupil than anyone, for TERRIBLE (and worsening) performance) can finally get a break.
Seriously, do you just read the politicians' speeches and assume that everything they say is true? Sheesh.
The presumption for corporate taxes is that corporations really don't pay taxes, individuals do -- because any taxes are passed onto employees with lower wages, or to consumers with higher prices.
I think Apple should look at the FairTax (fairtax.org). It replaces our current tax system with a consumption tax (in a progressive way -- it's a tiny bit more complicated than a straight national retail sales tax. It would replace corporate taxes, social security taxes, and income taxes with a simple retail tax -- and it was designed to generate the same amount of revenue for the government. The end result is that you keep all of your paycheck, the IRS goes away, and you pay taxes when you buy retail. It's not a VAT, in that it just charges the final product - so business-to-business transactions are left untaxed.
FairTax did a study on the effect of this, and it would bring a lot of that overseas profit back onshore, which as it's redistributed and spent, would be taxed. It would also tax foreign products at the same rate as domestically produced products, which is not what happens today, so it would level the playing field and help reduce the trade deficit.
It is definitely not something Washington would push on it's own, but with enough word of mouth - we could make this a reality.
I agree! However, i dont think this will happen. There are thousands of people employed by the IRS and thousands of accountants who make their living through tax loopholes. There would be a revolt (metaphorically) and possibly a strike of IRS workers. Millions of unprocessed checks and an unfunded government are not a good thing.
Try being less of a poor hobo?
I mean, everyone else, Steve Ballmer, for example, pay WAY less than 25% of their revenue in tax.... only poor people do such ridiculous things.
And it answers your question: corporations ' money is very rich people's money, not "some unknown and faceless entity"'s money. Those people pay very low tax on their income, why should corporations which pay them dividends pay huge taxes, which means less dividends?
Wow, so I guess I'm a very rich person. And so are most people here! Amazing!
It must be nice to have no clue about the world. The people who own public corporations are EVERYONE, just about.
Yes, if the government would ONLY spend some more money on public schools! That way our poor, underfunded children (who only get more money per pupil than anyone, for TERRIBLE (and worsening) performance) can finally get a break.
Seriously, do you just read the politicians' speeches and assume that everything they say is true? Sheesh.
Good sentiment. There is a big issue with the theory that throwing money at a problem will make it go away. However, just because that is his belief (erroneous or not) doesn't make him unintelligent.
Wow, so I guess I'm a very rich person. And so are most people here! Amazing!
It must be nice to have no clue about the world. The people who own public corporations are EVERYONE, just about.
The interesting thing about everyone owning corporations is that, in some cases, the board can actually be overruled by the stockholders. However, since it is unlikely that 40+% of stockholders would actually give a concise and unilateral opinion, the company is left with artificial control.
Anyone here ever been to business school ?
The purpose of management is to exploit each employee to the greatest potential and earn a profit for the corporation.
The CFO has the obligation of finding any and every way to avoid paying anyone anything they don't have to.
From hourly wages, to benefits and corporate taxes, it's all the same. Pay as little as the law allows.
When you want to capitalize here and your capital is elsewhere you ask for exceptions to the tax laws.
It's been going on for decades. Apple is one of the many, many corporations to do this.
Their current success makes using their name in the headline good news, hence profit for those that sell news.
It also provides hits for this site and allows greater sales of advertising on the site.
It's the current state of capitalism in this country. No real news here at all.
The purpose of management is to maximze shareholder value. Value is not exclusively defined as profit, hence many companies are involved in charitable activities because the owners find that valuable, as just one example. Second, many successfull managers believe trying to wring every drop out of the employees and such backfires and that a happy healthy workforce and a possitive relationship with government entities, communities etc. leads to higher long term earnings and therefore better maximizes shareholder value.
And yes I did go to business school.
Epic. It's like the matrix. I know I exist, but is that person real or a program?
The purpose of management is to maximze shareholder value. Value is not exclusively defined as profit, hence many companies are involved in charitable activities because the owners find that valuable, as just one example. Second, many successfull managers believe trying to wring every drop out of the employees and such backfires and that a happy healthy workforce and a possitive relationship with government entities, communities etc. leads to higher long term earnings and therefore better maximizes shareholder value.
And yes I did go to business school.
While that is the technical purpose, how would you comment on how the effects outside (i.e. personal ambition, government, etc) of the business market affect those decisions?
Just interested.
( by the way, i love how every conversation not related to android turns into a philosophical or societal discussion) (the android ones turn into slap fights)
Good sentiment. There is a big issue with the theory that throwing money at a problem will make it go away. However, just because that is his belief (erroneous or not) doesn't make him unintelligent.
If you think simply throwing money at a complex problem will make it go away, and that there are no costs in trying to do so, yes it makes you unintelligent.
If you think simply throwing money at a complex problem will make it go away, and that there are no costs in trying to do so, yes it makes you unintelligent.
except that wasn't the comment you responded to. He stated the funding for the issues (importation of cash) and it was merely made as a side comment. Though I believe the companies would choose not to bring in the money otherwise, the comment itself was not meant to be a logical argument necessarily, just an idea.
The trickle down theory doesn't work. Why because nobody forces the rich to share the wealth. If a tax holiday is given, there will be guarantee that stockholders will get a dividend. Apple isn't going to give one.
If only there was more force in this world. You'd better hope nobody ever decides you've got more money than you need, my friend.
The trickle down theory doesn't work. Why because nobody forces the rich to share the wealth. If a tax holiday is given, there will be guarantee that stockholders will get a dividend. Apple isn't going to give one.
You make it sound like the rich (and I hate that word because it is so vague) should be punnished for making money. If so, what incentive would there be to work hard and advance society?
Oh the irony....Apple (and others) not wanting to pay 30%.
It's not ironic. NOBODY wants to pay more money than absolutely necessary for anything. That's the amazing thing that makes capitalism works. Whining crybabies want there to be laws that protect them from their employers who, in their minds, are trying to pay too little for their services. Companies on the other hand want protection from having to pay their workers more than they are worth. The tug of war between the two sides ensures that all workers are paid fairly, relative to their peers. A worker with skills more valuable to society as a whole is paid more than one with less valuable skills. That is, until the government steps in.
When that happens, someone with less marketable skills gets paid more than they should, and someone with more marketable skills gets paid less than they should. Because unskilled dummies are a larger part of the workforce (and voting world) than highly skilled ones, societies that lose their will to compete tend to trend towards what the USA and France are today - socialism. In socialism, the more poorly skilled do better than they would have otherwise. The most highly skilled do far, far worse. The net result is that society is worse off, because 100s of thousands of people spend their whole lives merely moving the shells around from person A to person B, instead of doing something to advance society.
It's quite sad, really, and especially when you can watch it happening in slow motion.
While that is the technical purpose, how would you comment on how the effects outside (i.e. personal ambition, government, etc) of the business market affect those decisions?
Just interested.
( by the way, i love how every conversation not related to android turns into a philosophical or societal discussion) (the android ones turn into slap fights)
One of the biggest issues in corporate governance is how to allign Management's interests with the shareholders' interest. There is no simple answer. Lets assume a simplest of scenarios where owners only care about money and nothing else....
You can pay an anual bonus based on accounting metrics like profits. The problem is this can encourage a manager close to retirement to shoot for short term profits over long term profits. No investment in R&D, that costs money now, and the profits wont hit for years! It also creates a reward for cooking the books. And so on....
A much better solution is to give the managers stock options, or so we thought for a while. If the shareholders stock price goes up, so does the value of managements options. Wallstreet takes a longer term view and will (often) frown upon management teams that sacrifice long term profits for short term gains, and also the option terms are typically 5 or 10 years so management has to have a longer time horizon to cash in. On the downside, they still find ways to game the system, like backdating their options or managing wall street perceptions, sometimes illegally. There is also the issue that an option does not have the same risks as a share of stock, just the same reward. Management with options will have an incentive to take bigger risks than the shareholders would, knowing that they make a ton if they hit a home run and lose nothing if they strike out. This, along with a bonus structure that rewarded risk played a huge role in the Enron failure. The fraud that made the press was simply an attempt to cover up what had already gone sour from a poor reward scheme. Same issue for the investment banks.
So now what? Boards need to be vigilant and shareholders need to hold boards accountable. As I said even with a simple goal like make money, there is no simple way to keep managers perfectly aligned with shareholder interests. Reward sytems for management need to provide incentives for good behavior and disincentives for bad behavior, but there has to be oversight to make sure the system is not gamed, and action is taken if it is. The companies that do this well have a big long term competitive advantage. Many professional investors (including Buffet) put a big emphasis on corporate governance, more so than historical financial results.
It's not ironic. NOBODY wants to pay more money than absolutely necessary for anything. That's the amazing thing that makes capitalism works. Whining crybabies want there to be laws that protect them from their employers who, in their minds, are trying to pay too little for their services. Companies on the other hand want protection from having to pay their workers more than they are worth. The tug of war between the two sides ensures that all workers are paid fairly, relative to their peers. A worker with skills more valuable to society as a whole is paid more than one with less valuable skills. That is, until the government steps in.
When that happens, someone with less marketable skills gets paid more than they should, and someone with more marketable skills gets paid less than they should. Because unskilled dummies are a larger part of the workforce (and voting world) than highly skilled ones, societies that lose their will to compete tend to trend towards what the USA and France are today - socialism. In socialism, the more poorly skilled do better than they would have otherwise. The most highly skilled do far, far worse. The net result is that society is worse off, because 100s of thousands of people spend their whole lives merely moving the shells around from person A to person B, instead of doing something to advance society.
It's quite sad, really, and especially when you can watch it happening in slow motion.
Exactly! it's the very thing that causes its own issues in society. People see they can work hard and get paid money, or not work hard and... still get paid about the same amount. Its why socialist and comunist systems (not that we are anywhere near that yet) don't work, because they undervalue any desire to advance as a society, by overvaluing mediocrity.
One of the biggest issues in corporate governance is how to allign Management's interests with the shareholders' interest. There is no simple answer. Lets assume a simplest of scenarios where owners only care about money and nothing else....
You can pay an anual bonus based on accounting metrics like profits. The problem is this can encourage a manager close to retirement to shoot for short term profits over long term profits. No investment in R&D, that costs money now, and the profits wont hit for years! It also creates a reward for cooking the books. And so on....
A much better solution is to give the managers stock options, or so we thought for a while. If the shareholders stock price goes up, so does the value of managements options. Wallstreet takes a longer term view and will (often) frown upon management teams that sacrifice long term profits for short term gains, and also the option terms are typically 5 or 10 years so management has to have a longer time horizon to cash in. On the downside, they still find ways to game the system, like backdating their options or managing wall street perceptions, sometimes illegally. There is also the issue that an option does not have the same risks as a share of stock, just the same reward. Management with options will have an incentive to take bigger risks than the shareholders would, knowing that they make a ton if they hit a home run and lose nothing if they strike out. This, along with a bonus structure that rewarded risk played a huge role in the Enron failure. The fraud that made the press was simply an attempt to cover up what had already gone sour from a poor reward scheme. Same issue for the investment banks.
So now what? Boards need to be vigilant and shareholders need to hold boards accountable. As I said even with a simple goal like make money, there is no simple way to keep managers perfectly aligned with shareholder interests. Reward sytems for management need to provide incentives for good behavior and disincentives for bad behavior, but there has to be oversight to make sure the system is not gamed, and action is taken if it is. The companies that do this well have a big long term competitive advantage. Many professional investors (including Buffet) put a big emphasis on corporate governance, more so than historical financial results.
So in other words, people need to give a c***, otherwise they are just screwing themselves over. But not just one person, everyone collectively.
On a completely unrelated note to this forum, gold, commodity or speculation now that 70% of gold mined is sold to investors?
So in other words, people need to give a c***, otherwise they are just screwing themselves over. But not just one person, everyone collectively.
On a completely unrelated note to this forum, gold, commodity or speculation now that 70% of gold mined is sold to investors?
Yep, if no one gives a crap, bad things will soon happen. All but guaranteed.
Gold has not behaved like a comodity historically nor should it be expected to now. There is limited demand for the actual use of gold, relative to supply and production. We can have a copper shortage, an oil shortage or a cotton shortage. There is plenty of gold for all non hording needs. There are much better investments to make if you are afraid of inflation, on the other hand, there is plenty of money to be made in speculation too.