Executive Compensation Incentives

The executives are trying to make more money. They get paid in shares so making the share price go up makes them more money. Whether or not the means used to achieve that end are beneficial to other shareholders is beside the point. This is potentially a violation of fiduciary duty.

This is extremely naive. One reason executives get more compensation is because they frequently sit on each-other's boards and are more than happy to scratch each-other's backs. At large companies, most shareholders are "institutional investors" (rich dudes managing other people's money) and are not going to be showing up to shareholder's meetings complaining about executive compensation.Meanwhile those same shareholders are very happy to complain about worker&#x

I'm sorry for you.The CEOs / Executives are literally appointed by the board who in turn are voted in by shareholders. It is their job to increase the share price.The world is better of with efficient capital deployment.So, I don't understand how the smartest people in this world don't understand the fundamental working of capital markets.Note: it's the same shareholders that have allowed to get $200-$300k TCs when smart people around the world toil the same

It's more of a strategy to maximise short-term gains, and the downsides aren't considered - because they don't need to be.Public shareholders have absolutely no loyalty to any company they extract wealth from, and they can move their capital elsewhere in seconds. And CxO/execs are typically awarded bonuses on share price movements.So any action that moves the needle on the share price is a good thing. If this has bad long-term consequences, CxO/execs can always try

why do you think these people are making the company money? The CEO and stockholders all seem to think the company will make more money without them then with them?

Companies are made of individuals whose interest isn't necessarily aligned with that of its shareholders. For example, Google and Microsoft are run by executives who only own a tiny percentage of their respective company's stock, so they have little to lose by gambling their company's money on over hiring. If these new hires are useful, they get even bigger bonuses, but if they don't they won't be punished too harshly because basically every other executive made the same

You're mixing shareholders with stakeholders. Shareholders are only the investors. Execs would only care for stocks if their variable is tied to it. Low/mid employees don't really care.

When presented with the opportunity to either accrue savings, reinvest in the business, or inflate the stock price the executives and boards of these companies chose the latter. This happened to also be a decision that benefited them personally, since the majority of their compensation is in equity. Draw your own conclusions.

Keep in mind that executive compensation is at the expense of the shareholders, not the workers.

Because it's difficult to distinguish between executive leadership trying to efficiently return money to shareholders vs propping up the share price so that they see a personal benefit via their own shares increasing or via contractual bonuses.Given that there's an incentive to spend other peoples money(shareholders who bought shares) to increase their own(via bonuses, salary, or granted shares) it's fairly safe to assume that execs are following the incentive