Let's imagine we are Board of BigCo. Our CEO just took home fifty mil for what is at best a lacklustre performance.
We could fire his ass, but who do we replace him with? We could get pretty much anyone here on HN to do the job, for just one tenth of the cost. But if we hire say that lifeisstillgood, the inevitable PR disasters will wipe more than fifty mil off our stock / revenue.
But if we hire (insert your name here), a clearly brilliant HN member, they will discover that being CEO of a major company means very little power or influence - these things are like oil tankers and do not turn for anything. So getting an even better CEO than our guy will not manage to bring in much upside.
So unless there is a massive upheaval in the market meaning plenty of opportunity, then replacing a CEO is always a bad idea - the downside is huge, the upside is minimal.
Maybe that's risk adjusted returns - but I prefer cynicism.
Oh, there's also power dynamics at play. In practice most companies are run for the benefit of top management, not shareholders.
Some economist did a rather macabre study of share prices of companies as their CEO's died in various accidents. (Ie removal of the CEO controlled by factors outside corporate politics.)
Let's imagine we are Board of BigCo. Our CEO just took home fifty mil for what is at best a lacklustre performance.
We could fire his ass, but who do we replace him with? We could get pretty much anyone here on HN to do the job, for just one tenth of the cost. But if we hire say that lifeisstillgood, the inevitable PR disasters will wipe more than fifty mil off our stock / revenue.
But if we hire (insert your name here), a clearly brilliant HN member, they will discover that being CEO of a major company means very little power or influence - these things are like oil tankers and do not turn for anything. So getting an even better CEO than our guy will not manage to bring in much upside.
So unless there is a massive upheaval in the market meaning plenty of opportunity, then replacing a CEO is always a bad idea - the downside is huge, the upside is minimal.
Maybe that's risk adjusted returns - but I prefer cynicism.