Fool TV: Why Most People Hate People Like Me

Transcript
Hi, I'm Tom Gardner, CEO of the Motley Fool, here to offer my 120 on how to find a great leader to invest in, or to work for.

Turns out, if you look at the survey data in America, most people don't like CEOs. Most people hate people like me, and I can understand why.

After all, CEOs -- particularly of the last 10 years -- have shown a lot more interest in their financial pay package than in the health and happiness and service to their primary constituents at a business (their employees, their customers, and their shareholders), and that's an outright disgrace.

Most CEOs should be forced to keep most of their compensation in escrow, not received until after they have left the company, to prove that that organization benefited from their leadership. So how do you look for great leaders? How do you look for the sort of people that are looking to build success over a long period of time and not just the four years they're getting their stock-option grant?

The answer is, look for the passion. Capital needs a purpose, and the greatest leaders are trying to use capital to fulfill a mission. Something they care deeply about. Something they've been studying, learning about, and trying to master for their entire lives.

Think of Jeff Bezos at Amazon.com (Nasdaq: AMZN  ) , think of Herb Kelleher at Southwest Airlines (NYSE: LUV  ) , think of John Mackey at Whole Foods (Nasdaq: WFMI  ) . Think of people who have given not just a few years, not just a decade, but that they're going to give decades, or have given decades, to a single organization and made that the priority in their professional life.

Those are the people who earn substantial amounts of money as an executive that really deserve it, because they've shown that they're there to grow an organization and all the constituents in that organization in a healthy way, over long periods of time.

Unfortunately, it is rare. But if you're looking for a great leader, look for somebody that really cares about that company, really cares about that industry, and has worked in it for years, decades, and has given their professional life to it.

It may sound obvious, but it isn't. Most CEOs are on a turnstile from one organization to the next, looking for better compensation. Don't invest in those. Invest in the Motley Fool type of leader, the one that really cares about where they work. I'm Tom Gardner ... Fool on!

Tom Gardner does not own shares of any companies mentioned. Amazon and Whole Foods are Motley Fool Stock Advisor recommendations. The Fool has a disclosure policy.


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  • Report this Comment On March 05, 2010, at 3:43 PM, WileyCyote wrote:

    Unfortunately, only the bad CEOs get serious attention. That is what sells newpapers, magazines etc and gives the talking heads on financial programs something to do. For a good CEO, look at the company, how long has the CEO been there, where is the company going under the current management etc. Fortunately I beleive that we still have some very good CEOs but we have to remember that NOBODY is going to know about the late hours (NO, not drinking, WORKING) and the real effort necessary to run a company.

  • Report this Comment On March 05, 2010, at 4:54 PM, artistx wrote:

    I was fortunate enough to work at Starbucks for 11 years during that companies peak run-up to where it is now. I was also able to work with the ceo, Howard Schultz, from time to time and while I didn't always agree with his decisions, I never questioned his motivations. What kept that company going and what keeps it going today is the passion he and everyone working there has. I've seen that passion fizzle in some of the stores, which is understandable given the size it's grown to, but there's still passion at the top.

  • Report this Comment On March 05, 2010, at 6:17 PM, stan8331 wrote:

    It's so easy for us to get caught up in stock price gyrations. What you're saying here is absolutely true - the people who truly have a passion for the business they're in are the one who will make great leaders over the long term, and return the most value to shareholders, employees and customers alike. And it's not really all that difficult to discern those folks from the meal ticket crowd, if we're willing to look.

  • Report this Comment On March 05, 2010, at 9:22 PM, TMT33 wrote:

    Tom, I don't think you're anything like the people we all hate. You may be a CEO but I think that's where the similarity ends.

  • Report this Comment On March 06, 2010, at 6:24 AM, setterguy wrote:

    While a lot of what you say about passion is true. However, a lot of hate is due to the successful class warfare tactics of the political party now in control of our government.

    People don't become successful in business without passion. Unfortunately, business passion is often accompanied by greed. But it was not just greed that brought this country so close to a financial abyss. There was also a basic failure of government institutions.

    Right now it is more fashionable to hate business leaders. All the blame for this financial mess has been heaped on business leaders. While on the other hand, we make heroes of government leaders who should share equal or more blame for this deep recession.

    It has been a masterful deception.

  • Report this Comment On March 06, 2010, at 10:18 AM, ramsfanray wrote:

    I would take it a step further. Keep the compensation in escrow until 5 years after they have left. That gives the CEO major incentive to ensure the long term health of the company.

  • Report this Comment On March 06, 2010, at 12:36 PM, wolfman225 wrote:

    I have to disagree, sort of.

    Outside of a few sad, unbalanced souls out there who have truly bought the notion that the reason they don't have what they want is because "some rich guy stole it from them", no one really HATES the successfull. They're ENVIOUS of you!

    Let's face it, Tom. ALL of us, for various reasons, want to be wealthy (or at least successfull). What some mis-perceive as hate is really frustration. Frustration that we're just not quite as smart or talented, astute, visionary, brave, dedicated, etc. (pick one) as those who have "made it".

    After all, not everyone has the talent to be a Bill Gates, Steve Jobs, Warren Buffet, Donald Trump, et al. (or even a Gardner brother!) and very few indeed have the dedication of a "Colonel Sanders", who had a difficult time GIVING AWAY his recipe before he tried going into business for himself; or a Thomas Edison, who went through literally THOUSANDS OF FAILURES before he succeeded with his inventions.

    As a truck driver working 70hrs a week, making low $40's, I certainly don't hate responsible CEO's. I don't even hate the one's who pull down multi-million $ packages. It's not any of my business (unless I'm a major shareholder) what ANY CEO makes (nor is it any business of the government, excepting fraud or other criminal activity)! I simply yearn to join "the club" of financially secure individuals. As opposed to tearing down the successful, I want to learn from them! That's why I lurk around this site, hoping to learn ways to invest and grow my (for now) meager assets into something that will support a stable retirement.

    No, I don't hate others' success, I want to learn how to build my own.

  • Report this Comment On March 06, 2010, at 6:48 PM, jim7holton wrote:

    The preceding comments are well taken, however, Mr. Edison's dry spell and succeeding patents were the result of his employees help to develop them. In a capitalist form of an ecomomy the system only works with the help of both leaders, employees and the consumer of their products or services. If the consumer ( either a company or individuals like you and me) falls ill without any help due to low wages, the health insurance of his/her company, he will not be able to work or buy the product or service. When this is multiplied by millions,then, the economy can falter because of fraud or other things. I, too, read in hopes of making some extra money for my present retirement.

  • Report this Comment On March 06, 2010, at 7:08 PM, PSU69 wrote:

    Having served as president of a global business, it is fun to see the diverse systems around the globe. I still believe our system, with many faults and weakneses, allows an individual the best potential to thrive and "make it." How we each define contentment is a bigger question. Certainly, income and bloated comp can stir emotions. Some CEOs are well dressed thieves, face it. Fortunately, the vast majority of execs really do their best to lead the vision and secure a future for the business, the stakeholders, and the served market members. I support businesses and organizations that deliver value with ethos. For example, I admire GOOG for raising a little ruckos about the "China sydrome," using emails to track and hunt free speech advocates. Disclosure, I own GOOG.

  • Report this Comment On March 06, 2010, at 11:26 PM, Dobbes wrote:

    Taking the idea of "managements committed to their constituencies" on step further: I think a lot of companies investor relations are really quite lacking. I find it kind of disturbing, in this day and age of electronic communication that companies only really try to reach their shareholders at annual meeting and proxy vote time.

    How hard would it be to have an RSS feed or e-mail list on your investor relations page? That way I don't have to constantly comb secondary information sources for new happenings with the company I am invested in. I can get sent the PR release directly and there is no chance of me missing it while combing the news-wires.

  • Report this Comment On March 08, 2010, at 2:04 AM, esxokm wrote:

    Simply put, CEOs should be paid a simple salary of, say, $500,000. Nothing immoral about that. And you'd find plenty of individuals who are smart enough, and willing enough, to create value for a company.

    Why do I want CEOs to only make so much? Simple: if I take the risk of investing in a business, I should be as overcompensated as possible through dividend payments. Yes, I am a greedy capitalist. Only thing is, unlike other greedy capitalists who pretend they are capitalists (i.e., ordinary shareholders who constanly defend CEOs and their right to millions and millions of dollars for some odd vicarious reason), I am the real deal. I recognize that paying a CEO millions is not necessary and is, in fact, nothing more or less than a game of networking.

    I'll never understand why my fellow shareholders are not as capitalistic as I am. Anger directed toward CEO pay is not class warfare...it is the sign of an intelligent investor.

  • Report this Comment On March 08, 2010, at 11:29 AM, jfenlon wrote:

    I wonder where Jack Welch would fit now that enough time has passed to evaluate his tenure dispassionately. If any readers who worked for GE and survived his stewardship see this I'd be grateful for your comments.

  • Report this Comment On May 06, 2010, at 12:11 PM, learningfool1873 wrote:

    What I really hate is when CEO's are overcompensated by getting millions in cash, millions in shares of stock, & options to purchase millions of shares of stock for small amounts, plus health benefits for life, while at the same time the company claims that the average worker - who WORKS - for fair wages is told they don't have enough money to keep up with inflation--or worse, asked for pay concessions--& to pick up ever-increasing co-pays on their lessening health benefits.

    Why does this happen? Because many of the "independent" directors who decide the pay of the top management work for companies who have boards that include the CEO's whose pay they're deciding on - & since those CEO's are "independent" directors in THEIR companies, they are the ones who decide on how much compensation THEY get. It's all intertwined. You won't convince me that the "independent" directors would deny excessive pay to the same CEO's who decide how much THEY receive!!

    One prime example of excessive pay for a CEO is Ed Whiticare (spelling?) who retired from AT&T with many millions & life-time health benefits & other perks. Where is he now? GM - & when he leaves, I'll bet he'll get millions from GM. Meanwhile, AT&T told workers & retirees that the company didn't have enough money, so they'd have to expect less in wages & pick up more in health-care costs. If they gave good ole boy Ed only a few million less, they would have no problem with wages or health-care!

    THAT'S why CEO's leave a bad taste in the mouths of workers, retirees, & shareholders.

    I have no problem with management making decent money, but put a little thought into WHY your company is successful - not ALL the work is done by top management! Don't pay them like they're the only ones who did any work!! Most companies would not last very long if the WORKERS didn't work!

  • Report this Comment On January 30, 2011, at 9:45 AM, Merton123 wrote:

    I believe that Tom Gardner hit on some key points in relation to evaluating a company. Does the company's culture focus on providing a quality good/service to the customer? For example Toyota's use to be focused on providing a quality vehicle and gained market share at the expense of the American Car Manufacturers. Today they appear more concerned about getting the car out of the door versus putting their customer first. The companies that grow are the ones who better serve their customers then their competitor. Net Flix does a "better" job then its competitors in providing wide variety of entertainment at a reasonable price to the general public. CEO come and go. The organizational culture and how that organizations meets a given need is what determines it growth potential

  • Report this Comment On January 31, 2011, at 12:36 PM, ChiefNoseeum wrote:

    There are different reasons for people to "hate" CEOs. The one that brings the most white hot rage is when a CEO of a profitable company fires employees, out sources jobs, short changes customers in oder to pump up the stock price. He then take s big bonus for " making the tough decisitons".

    Perhaps the French had the best solution for this type of bahavior in the 1790s.

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