Originally Posted by murraypaul
What I do dislike is the modern trend for executives to have more concern about managing their share price than their company.
I don't think share price concerns should have any effect on a companies decision making, they should be focusing on the company itself, and increasing revenue and profit. Instead (fulled, no doubt, by share-price related bonuses), success is measured by whether the share price goes up or down.
Shareholders are rewarded through dividends, and the best way to increase dividends is to run a profitable company.
The success or failure or short-term speculators (where medium term would be years if not decades) should not affect business decisions.
(I also hate the modern 'journalism' that regards reporting rumours from another site as somehow being a real story. Second rant over too.)
I remember a newsmagazine show (maybe 60 Minutes) about this. Former AT&T employees were asked if they were stockholders, had they been stockholders, and why they sold their stock if the latter. Most had sold their stock at a point when they thought it was overpriced. The interviewer asked each if he realized this was the pressure that caused AT&T to take the actions that resulted in their termination. Good looks and uncomfortable responses.
CEOs are hired by shareholders. The boards tie compensation to stock price because they want the CEO to share their priorities. The only way to avoid this is to patronize privately held companies.