[timoth3y]

I think a lot of this has to do with the explosion of CEO (and by extension CxO) pay over the past 30 years.

Today, a CEO can turn in a few quarters of really solid earnings growth, they can earn enough to retire to a life a private jets. Back when CxO pay was lower, the only way to make that kind of bank was to claw your way into the top job and stay there for a decade or more.

The current situation strongly incentivizes short-term thinking.

With today's very high, option-heavy compensation a CEO making long-term investments in the company rather than cutting staff and doing stock buybacks is taking money out of his own pocket.

It's a perverse incentive.

[samiwami]

CEO’s also never face consequences for destroying companies. Zaslav has run WBD into the ground and it’s currently being surrounded by vultures, and he’s still making like half a billion a year.

[johnnyanmac]

I wish I could find the article about it that I read a few years back. But CEOS needs skin in the game again. the incentives are all broken. running a good business doesn't matter anymore (at least in the US).

[ljhsiung]

While I definitely agree CEO pay is quite egregious, in theory, to mitigate short-sighted quarterly earnings hyperoptimization, couldn't a board simply tie equity incentives to performance targets and timeframes though?

Lip Bu Tan, for instance, has performance targets on a five year timeline, which are all negated if the stock falls below a certain threshhold in 3 years. [1]

Or, ever controversial Elon Musk, certainly has an (also egregious) $1 Trillion dollar pay package, but it has some pretty extreme goals over 10 years, such as shipping 1 million Optimus robots [2].

All in all, we can debate about the Goodharting of these metrics (as Musk is keen to do), but I feel boards of these public companies are trying to make more long-term plans, or at least moving away from tying goals to pure quarterly metrics. Perhaps we can argue about the execution of them.

Note: I own neither of these stocks and my only vested interest is buying the S&P.

[1] https://www.cnbc.com/2025/03/14/new-intel-ceo-lip-bu-tan-to-... [2] https://www.bbc.com/news/articles/cwyk6kvyxvzo