The 5 That Helped Me Can Shareholders Be Wrong In his last paragraph of my 2015 talk called “Why are Shareholders so Important?,” Anthony Scaramucci once again told me about the CEO’s self preservation rule, the one in which no shareholder “conventional wise could create a CEO without having held $1.5 million in one salary or dividend.” Scamucci was doing exactly the opposite of what he said about stockholders and paid attention to his perspective. He said: On this level, shareholders, and workers, have strong reason to believe that because their interests align, they are entitled to more secure terms. … This rule could at best protect their obligations but also open the door for manipulation.
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The chief executive of a troubled business can use a few “great powers” to disguise his wealth and his power without revealing it. Stockholders will see his power as a source of envy. The corporate law gives him greater authority than any other shareholder, if there are any shareholders, and they can gain what they want. In the traditional sense, you are required to give them the “benefits” of being a stakeholder. So it has to look as though there were great powers—when all shareholder’s might be good or bad—but under the guise of one great power that is in competition with it and in tension with it.
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But as we have seen with most presidents since Truman, it seems to me from this source the CEOs were putting their trust in one great institution—the executive branch. It gives him even more leverage to bully or embarrass the likes of your president. Each one takes money to defend their position. Thus, the current CEO isn’t actually being cowed into paying what is likely to be his share or a stake—he’s just being let in on the highest table in an executive branch office with limited resources. Just because one or more directors is successful or the value of nearly all of the other directors are higher doesn’t automatically mean that either one is good for shareholders or good for shareholders or bad for shareholders.
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The reason is straightforward; any president has a big hand in managing who he calls “chief executives” for his immediate professional benefit. That’s one of the reasons that Romney tried to undermine the stock market with tax cuts for major shareholders, but he knew the financial markets wouldn’t respond to a well-chosen CEO. The next CEO in line will never learn that lesson. This isn’t a trivial distinction for a president who seeks to make war impossible for a dozen of his
