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A comment on CEOs are hugely expensive – why not automate them?. Parent comment

Re:CEOs are hugely expensive – why not automate them? by whimsicalism on Monday April 26, 2021 @12:09PM (#26944174)
> the best CEOs might not go for that. There are a lot of long term things that can impact a company for the negative

You could develop a financial services company selling hedges for that risk to CEOs/executives?

> alters the long term upside of your company

I don't see how this is worse than short-term stock compensation

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Re:CEOs are hugely expensive – why not automate them? by MattGaiser on Monday April 26, 2021 @12:15PM (#26944261)
> I don't see how this is worse than short-term stock compensation

The CEO has an incentive not to destroy the existing value in pursuit of large gains. With compensation based on the industry spread, they may as well risk any existing value as it is worthless to them.

Currently: A CEO who does nothing but keep the stock price where it is would get 2 million. If he performs as well as average, he might get 4 million. If he beats the industry, he gets 6 million.

With leveraged spread system: A CEO who does nothing but keeps the stock price stable gets 0. A CEO who performs as well as industry gets 0. If he beats industry, he gets 6.

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