Should Managers Be Shareholders?
July 3, 2009 by Tisa Silver
Filed under Finance
The goal of financial management is to maximize shareholder wealth. If your managers aren’t shareholders, why should they care?
If managers held a substantial ownership stake in the company, they would be more inclined to behave in ways that would add value to the stock. Maybe their own personal greed could help their employers succeed?
Executive compensation and aligning the interests of owners and managers will always be hot button issues.
In the movie, Wall Street, Gordon Gekko (Michael Douglas) delivers a passionate speech to shareholders of his latest takeover target. “Greed is good” may be the most often referenced quote of the speech, but there are other points worth considering i.e. wasteful behavior, overstaffing and lack of management ownership.
Watch the clip below of Mr. Gekko exposing managers for their behavior at a shareholder meeting.
