6

Another CEO scandal?

If bank bosses weren’t aware a crash was coming, why were they selling their stocks?


 

Though Wall Street CEOs have routinely denied being aware of the risks that led up to the 2008 financial crisis, a new U.S. study suggests otherwise. Sanjai Bhagat at the University of Colorado and Brian Bolton at the University of New Hampshire looked at the compensation of executives at the 14 largest U.S. financial institutions, including Goldman Sachs and Lehman Brothers, in the period between 2000 and 2008. Focusing on CEOs’ trading of their banks’ stock, the academics found that executives were 30 times more likely to sell than to buy. One would expect confident CEOs to hold on to their shares, or even buy more. What’s more, the dollar value of those sales were about 100 times the value of open market buys.

These trends suggest the executives also did not believe in the risks their banks were taking­. Worse still, Bolton and Bhagat say the CEOs turned a profit, what they called “the net CEO payoff,” because their earnings were greater than the value that shares lost in 2008 by US$649 million. The authors argue such bad behaviour could be curbed by a compensation model that gives executives restricted stock options. Instead of buying and selling any time, CEOs would have to hold their shares for up to four years after their last day in office.


 

Another CEO scandal?

  1. Sorry. Wrong focus. Everybody who's anybody knows that public sector unions
    are all that's wrong with the world. Guess I probably need this :).

  2. Sorry. Wrong focus. Everybody who's anybody knows that public sector unions
    are all that's wrong with the world. Guess I probably need this :).

  3. It doesnt matter if you prove that CEOs knew they were killing their own companies unless you actually plan on punishing them for it.

  4. It doesnt matter if you prove that CEOs knew they were killing their own companies unless you actually plan on punishing them for it.

  5. lol my comment got deleted, sorry forgot not to swear out of frustration.

    Anyway, what I said was this…

    Unless we all wake up and stand up for ourselves and stop letting these management people abuse their power then nothing will change, other than their salary increases…

    The CEO's don't care much since everyone in management is doing the same thing. After all, they create the rules that benefit them mostly by cutting "costs" and increasing "profits" and "productivity". But in actuality costs = front line employee salaries, profits = what they calculate their bonuses from, and productivity = more hours and work and less pay.

    This is what unions are good for BGLong… is to stop the regular people from being abused and giving the regular people rights.

  6. lol my comment got deleted, sorry forgot not to swear out of frustration.

    Anyway, what I said was this…

    Unless we all wake up and stand up for ourselves and stop letting these management people abuse their power then nothing will change, other than their salary increases…

    The CEO's don't care much since everyone in management is doing the same thing. After all, they create the rules that benefit them mostly by cutting "costs" and increasing "profits" and "productivity". But in actuality costs = front line employee salaries, profits = what they calculate their bonuses from, and productivity = more hours and work and less pay.

    This is what unions are good for BGLong… is to stop the regular people from being abused and giving the regular people rights.

Sign in to comment.