Forum: Bryce


Subject: Outragously OT - The True cost of life in the UK

TheBryster opened this issue on Jun 09, 2010 · 35 posts


electroglyph posted Sun, 27 June 2010 at 11:57 AM

Corporations have the same problem.
You start a company to make a lot of money, more than you can by working for someone else anyway. So you get really successful. Eventually you hit a plateau. You can't grow more without expanding. The classic way is to go public and make a stock offering. Your focus shifts from making a product and paying yourself to having good stock prices and paying dividends to your shareholders. The shareholders want the stock to outperform banks and bonds every quarter. If you decide to pour all your profits into a west coast expansion and cut the dividend you could find yourself in a proxy fight or even voted out of your own company.

Unlike the good old days when you could start and retire with the same company corporate executives change jobs about 7 times during their career. Some actually make a career of downsizing corporations by firing and selling off assets then moving to another company. Other's specialize in taking local companies national, or national companies international.

The number one carrot for executives is the corporate bonus. This is usually tied to monetary performance within a sector of the company. Of course you can make more money by moving more product. You can also make more money by cutting costs. Only using 7 braces on your blowout arrestor when the engineers recommend 21 saves lots of money as long as nothing happens. Forgoing modernizations and expansions so the money can be counted as revenue are typical corporate policy. You can argue all you want that these fixes will position the company for growth for the next 5-10 years. Stockholders won’t give up dividends for a year to get a triple return next year. They want paid now. Unlike the time of the Vanderbuilts,  modern stockholders are mostly pensioners with stocks in mutual funds.