I like the last paragraph of the article because it puts full faith into a free market. In this case, the market for CEO's:
At the end of the day, what is the true market value of a CEO? Every MBA knows that the market value of anything (or anyone) is whatever the market is willing to bear. That’s how Howard Stern walked away with a $600 million deal from Sirius before he had ever spoken a single word on satellite radio. Maybe he’s worth it, maybe he’s not. However, in the time period since he signed the mammoth contract with Sirius, the company’s stock price has doubled, creating $5 billion in new shareholder value. All too appropriately, a recent Wall Street Journal article about Stern was titled “Shock-Jock Stern Has New Fan Base: Well-Paid Executives.”I've posted on this topic recently and you can catch up on the discussion here.
1 comment:
Stern signed with Sirius in mid-October 2004, when the stock price was roughly $3.86. Although it doubled in the month right after the announcement, it has now corrected to around $5.86 and has never gotten close to it's high within the last year.
So it created a spike in value, and then quite a loss in value for some investors. The announcement didn't create SUSTAINED value for Sirius.
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