What’s the motivation of the CEO to increase employee wages if his compensation isn’t tied to theirs?
There’s this perverse belief that companies should exist to enrich the wealthy shareholders at the expense of the workers and it’s put us dangerously close to a complete collapse of the social contract.
> What’s the motivation of the CEO to increase employee wages if his compensation isn’t tied to theirs?
Wages are a cost. Profits are revenue minus costs. Share price is driven by profits. The job of a CEO is to maximize share price.
The only reason to raise wages is if you think it will lead to a net gain of profit during your tenure. Say do to efficiency or simply retaining better talent. There’s no gain for simply raising employee wages. Quite the opposite.
It absolultely is not. That was an idea floated by Milton Friedman, and he was wrong with his ridicluous assertion. His justification wasn't even legally sound...
A CEOs job is to grow market share, increase the value of the company, and tend to its long-term health. All of which directly conflicts with "maximizing the share price" as we've seen time and time again with the corporate raider class.
The beauty of share price and market cap (share price times total number of shares) is how easy it is to determine. How is this "intrinsic value" determined?
There’s this perverse belief that companies should exist to enrich the wealthy shareholders at the expense of the workers and it’s put us dangerously close to a complete collapse of the social contract.