A Southwest airlines employee told me it’s MBA accountants that have refused to invest in anything that didn’t immediately add to the bottom line. Not working well....
“A Southwest airlines employee told me it’s MBA accountants that have refused to invest in anything that didn’t immediately add to the bottom line. Not working well....”
Only works out for their own pocketbooks. CEO and senior executive pay has grown to astronomical heights since the 1980’s as companies moved to hiring outside MBA’s and financial CEO’s instead of promoting from within. Their pay packages are heavily weighted toward huge bonuses and large stock option grants. The bonuses, usually based on earnings per share, can be affected by large share buybacks which reduce the number of shares and thereby increase earnings per share. The stock options benefit from increases in the stock price. The stock price can be boosted through financial manipulation such as stock buybacks, cutting product quality, and selling off assets, reducing R&D expenditures and outsourcing which temporarily increases earnings but long term guts the company of productive assets.
Given the average CEO in the United States has a tenure of 3 years, CEO’s are highly focused on maximizing the value of their compensation package at the long term expense of the company they likely will be leaving within 2-3 years.