"creating shareholder value", they call it

Commenting in the past about Jamie Dimon’s $80M payday, for delivering below industry average returns for JPM shareholders, and Boeing honchos pocketing tens of millions, while the Welchist cluster they have brought has cost shareholders $80/share over the last 6 years.

Here’s another one to chew on, Kimberly Clark.

Observe the basically flat shareholder return over the last three years, below all the benchmark averages, although the numbers were “better than expected” compared to the benchmarks management set for itself. But the CEO receives a $2M+ bump in pay every year. The pay bump for 2023 is particularly interesting, as most honchos saw their pay go down in 23, but even more money was thrown at the CEO, and CFO. Was the CFO’s bonus for his excellent work in manipulating the numbers to increase the CEO’s payday? (rank speculation on my part, just throwing it out there)

Just who is the CEO working for?


For the CEO. Who else matters?

If for a moment you can get away from the traditional mantra of ‘invest like an owner’ you can get to see the current reality based on understanding the nature of complex systems.

When you have a small business you work for yourself. Who else matters? Customers, for one since without customers you don’t have a business. Is the customer always right? No! Employees, good employees are worth holding on to but many need to be fired. I had one case where a customer had a good employee in tears. I offered to buy back the computer at full price and would he please find a supplier who could attend better to his needs. Never heard from him again. Good riddance!

Once you have joint stock corporations run not by owners but by managers the priorities change. Customers are no longer flesh and blood but statistics. Same with most employees who are not in the same building as the managers. As a small shareholder you don’t have the power of an owner so, if dissatisfied, you just sell your shares.

Don’t invest like an owner, invest like an investor.

Don’t chew on it. DUMP IT! Not to worry, Private Equity will buy it and destroy it.

It’s a Brave New World.

There is a big difference between founders and mangers running corporations. I saw the decline at IBM after the son of the founder retired. At first, while the Open Door culture declined, the business boomed but then decline set it. Same was true a Hewlett-Packard. Tesla has a culture reminiscent of the early IBM and Hewlett Packard.

The Captain


DesertDave and I would talk about that from time to time. Dave had an army surplus store. He said he never got a job from a poor person. I said yes, he did, he had a job thanks to the people who bought stuff in his store. It’s a matter of mind set. I have told the story before, of how I heard the President of Radio Shack bellow “we do people a favor when we sell them our stuff”, as if RS was God, and people were paying a tithe. We know how RS ended up.

As offered before, people like you and me are nothing but ledger entries under “source of funds”.

Actually, I am doing OK on KMB right now. Bought it in late January, right after it had taken a dump. Thing is, it is getting difficult to find USian companies that are not being looted by their management these days. At least KMB management has not resorted to liquidating the company, like Boeing management has.

I have told the story before, about the RS manager’s meeting. The District Manager started praising the company’s “open door policy”, and a wave of derisive laughter swept over the room. The DM said “don’t you believe in the open door policy?” We managers chorused “NO”, because we had all seen the reaction when anyone said anything the big dogs in Fort Worth did not want to hear.

I have never had so much trouble finding well established companies that were not being looted by management. Could not really expect anything else, given the deification of “JCs” over the last 40 years. How did I vote on the KMB big shot pay plan? NO! Will it make a difference? Nope, not one whit.

Another management proposal on the proxy was amending the Certificate of Incorporation to limit the liability of certain company officers wrt breaches of the fiduciary duty of care. That one got a firm NO too. As offered before, here in Shiny-land only Proles are lectured about “personal responsibility”.