Ask HN: Why do companies care about their own valuation?

Re:Ask HN: Why do companies care about their own valuation? by blueterminal on Wednesday May 13, 2020 @05:51AM (#23165202)

Imagine if you're the CEO of the company and you own 100000 shares of it. Then your net-worth between 100$/share and 120$/share will differ by $2 million. Quite a difference, isn't? And I think most board members hold certain amount of company's stock, and usually most people want their net-worth to grow as much as possible, so they try to do certain things to increase the stock price.

That's one of negative things about stocks in general in my opinion, because people quite often have short-term (lasting a quarter or two) outlook.

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Re:Ask HN: Why do companies care about their own valuation? by shoo on Wednesday May 13, 2020 @06:40AM (#23165499)

Same argument is also possible if the CEO/board/other insiders have a decent chunk of their net worth as options for the company stock. But in that case, the increase in insider net worth can be highly nonlinear as a function of the price of the company's share price.

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Re:Ask HN: Why do companies care about their own valuation? by pmiller2 on Wednesday May 13, 2020 @07:13AM (#23165681)

> That's one of negative things about stocks in general in my opinion, because people quite often have short-term (lasting a quarter or two) outlook.

That could be easily fixed by requiring all executive and board members' stock to be held for, say, 3 years after vesting before selling.

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Re:Ask HN: Why do companies care about their own valuation? by lberk on Wednesday May 13, 2020 @07:25AM (#23165741)

Has it really vested at that point then?

Or is it just a longer vesting period?

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Re:Ask HN: Why do companies care about their own valuation? by bruce511 on Thursday May 14, 2020 @01:30AM (#23175687)

I guess that depends on your understanding of "vesting" - and my understanding may be faulty.

As I understand it, if I leave the business before the vesting I get nothing. When the stock vests it becomes mine.

A lock down of the stock then means I can't trade it, but it remains mine (regardless of whether I stay or leave.) Once the lock is lifted I could sell it.

So in that sense there's a difference, yes.

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Re:Ask HN: Why do companies care about their own valuation? by vpoulain on Thursday May 14, 2020 @07:52AM (#23178367)

I mean that making money with public stock market make hardly sense for me. It is not correlated anymore with the value you can bring.

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