How French Drains Work

Re:How French Drains Work by zie on Thursday August 08, 2024 @01:41PM (#41194210)

Technically true, but the people in charge are not the customers. The people in charge(C-Suite) have zero incentive to ever refund any annual profit. They have all the incentives in the world to ensure their compensation just happens to suck up any and all annual profits. Who is going to stop them?

Vanguard(the brokerage) is structured the same way pretty much, except it's the various mutual funds(like VTSAX/VTI) that own the larger corporation. So far the infection of c-suite salaries continually growing larger and larger hasn't gotten to Vanguard yet, but they are now a few CEO's removed from the original founder(Jack Bogle), so it's probably about time that shift starts to happen.

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Re:How French Drains Work by throwaway2037 on Monday August 19, 2024 @10:42AM (#41291481)

    > The people in charge(C-Suite) have zero incentive to ever refund any annual profit.

This makes no sense. Well run mutuals regularly refund part of insurance premiums each year.

For example, in 2020:

    > USAA, the country’s fifth largest property-casualty insurer, will be returning $520 million to its members.

Ref: https://newsroom.usaa360.com/news/usaa-to-return-usd-520-mil...

If what you say is true, why did they return any money at all? They could easily pay that to C-suite and senior execs in huge bonuses.

Also, to clarify, the correct term is "mutual insurance", which Wiki describes as:

    > A mutual insurance company is an insurance company owned entirely by its policyholders. It is a form of consumers' co-operative. Any profits earned by a mutual insurance company are either retained within the company or rebated to policyholders in the form of dividend distributions or reduced future premiums.

Ref: https://en.wikipedia.org/wiki/Mutual_insurance

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