It is a tale as old as time, as Disney would say. A community once bound together by war, famine, or invaders finally finds security and begins to achieve a level of growth and success. Only, the good parts do not get evenly distributed, and suddenly there are haves and have less. In America, free market capitalism is our last best hope for the ability to change outcomes. Of course, this is the long view. From the short perspective of today’s instant gratification society, we no longer possess the patience to wait out cycles, and we want what we want now. Failing that, we prefer that others don’t get what they want. That brings us to the state of CEO compensation today.
CEOs should be good at many things, but there is really only one thing they must be good at—that is thinking through complex problems and designing equally powerful solutions. It is time they applied their great minds to finding some obvious solutions to the perception of compensation. It would materially help regain lost ground and public confidence.
Don’t Like the Cards? Shuffle the Shareholder Deck
We get the shareholders we deserve. How much time do CEOs spend during ordinary times finding a better class of longer-term shareholders? Goldman Sachs’ Lloyd Blankfein understands the importance of building the right shareholders better than most, so he made sure in the crisis period that Buffett was on the roster. Other CEOs should be regularly visiting with and canvassing smart shareholders about holding their stock for longer periods with lock ups and benefits. In the theater business they call it papering the house, having a few friends in the right seats. It can bring on a round of applause just when the company needs it most.