Share price incentives are the main racket. Great idea for startups, give them a meaningful percentage of a company worth a few thousand and if they grow it to something substantial then arguably they deserve to be rich.
What usually happens however is that a large company goes into reverse for a bit, it might also be facing structural problems or external ones such as a market contraction in parts of its business, and the management changes. The share price crashes when the CFO and CEO leave, the new management comes in with big share incentives, chucks the kitchen sink into 'non-headline' restructuring costs, implements cost cuts, and waits to get rich. That they increase dividends along the way to boost the share price at the expense of sufficient capital investment and/or increased debt weakens the business ahead of the next reversal, after they have departed if they are smart. They have got their money and reputation and if the business does go bust, then the employees, their pension scheme, and their other creditors take the hit. If it doesn't then the shareholders take the capital losses until the cycle starts again.
I've often thought that management should get the big rewards when they have successfully managed a business through a recession, rather than being incentivised to pile it with debt or just run the business for cash to distribute and potentially weakening it fatally. I wasn't thinking of Carillion but it's a good example of a company being financially undercut while the directors were being paid 7 figure bonuses, then going bust owing something like £6bn.
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