> It's a very typical failure mode for publicly-traded companies. For a CEO to have the incentive to do something that will kill their company, in a few quarters' time—in exchange for a one-off windfall that will boost the stock price, CEO compensation, &c. Short-termism at the "eating the golden goose" level.
If it makes the major shareholders money, then in our system, it is, by default, not a failure mode, but a feature.
The C-suite has a contract that guarantees them generational wealth under most circumstances. They're incentivized by stock options granted to them by the board, which is elected by shareholders. Most shareholders in major companies are institutional investors who are paid to do nothing but make sure that a company going out-of-business is a non-issue (if not even a boon) for their returns. It makes no real difference to the institutional investor if Reddit goes down in price; the people who were gaining in their holdings from Reddit are diversified. The people actively drawing off of their holdings are doing so from asset classes less volatile than equities.
In other words, there's no incentive to keep companies running as a going concern.
If it makes the major shareholders money, then in our system, it is, by default, not a failure mode, but a feature.
The C-suite has a contract that guarantees them generational wealth under most circumstances. They're incentivized by stock options granted to them by the board, which is elected by shareholders. Most shareholders in major companies are institutional investors who are paid to do nothing but make sure that a company going out-of-business is a non-issue (if not even a boon) for their returns. It makes no real difference to the institutional investor if Reddit goes down in price; the people who were gaining in their holdings from Reddit are diversified. The people actively drawing off of their holdings are doing so from asset classes less volatile than equities.
In other words, there's no incentive to keep companies running as a going concern.