Time to fire bank CEOs
Almost all firms have layoffs and yet senior management never gets dinged. Lazard’s stock price is lower than when CEO started over a decade ago. Now they are firing 10% of the firm but he’s chilling? David Soloman is running around djing while gs has massive layoffs and loses ground to competitors. Why don’t these guys ever get the boot?
Unfortunately the boards seldom carry out their fiduciary duty towards shareholders. Share price kind of is what it is and I hate how much it’s emphasized versus improving operations and executing on strategy.
fudiciary duty is towards the company not shareholders
No, it’s to the shareholders.
It used to be, now it’s just to the woke mob
You sound salty and uneducated.
Lazard CEO started in November 2009. Share price was at most $24. LAZ closed today (may 3, 2023) at $29.81
if you can’t get this math correct then don’t blame anybody else for your layoff
P.S. banks are cyclical and always trade down in recessions (everybody with half a brain knew this one was coming after Covid)
The stock price was was 39.54 on November 13th 2009 (3 days before the CEO took over)
Can you share TSR over that period vs SP500?
Are you the Ohio state guy that got canned and keeps following all my posts?
BGL is hiring
This person is either joking or severely autistic. Either way it’s hilarious
I understand the frustration but ultimately the other post in this thread is correct - investment banks are fundamentally exposed to economic downturns, particularly those accompanied by interest rate hikes (all of which manifest into much lower deal volume - this isn't specific to one particular bank). Lower deal volume should mean that banks need to cut their cost base (and I'm NOT agreeing with the scale of layoffs necessarily, nor any particular layoff). To the extent that share prices reflect discounted future cash flows to equityholders, it makes sense that share prices should fall.
I also don't think it's fair to argue that anyone, even a CEO, shouldn't have a life outside of their job.
Now, that said, COULD there be a case for removing a particular CEO? Sure. But I don't see it as a broad-brush thing in banking that CEOs are bad, and the case would need to be backed by some strong arguments.
.
People at the top don’t lay themselves off. They fire people below when things don’t workout. Every firm does that. Back a ceo in a corner and he will fend for himself like an animal
Just to play devils advocate:
Maybe all the pay and benefit increases in 2021 came with a bill we’re paying now. You can’t roll back salaries layoffs become deeper instead.
Agree with the OP, major banking CEOs tend to have lower performances vs SP500 Players and longer tenures.
Counter argument to my own argument:
Industry is highly regulated.
Industry is extremely human capital intensive, and it is pointless to replace senior leadership at large banks who functionally own the relationships and are some what core to firms brand value
I know this isn’t quite what you are talking about but I think this is, broadly speaking, what should be required for government assistance.
If the government is doing something beyond the normal regulatory scheme (ie - TARP, trying to find buyers because your bank is about to go under, etc) then the CEO, CFO, top risk management officer, and board of directors should be fired and be not allowed to be a c-level/board member/top risk management role for 5-10 years. This should also be the case for any product/service heads (ie - Salomon’s head of Treasury trading, basically every head of mortgage securities, etc).
This would make people far more… considerate of risk. People talk about moral hazard but the only real way to address this is by creating a system where the individuals who have actual responsibilities will be severely punished if the risk is realized. It also allows the government to bail out institutions while actually addressing the issues that led to the need to bail out the institution
jl12 is a better Liz Warren than Liz Warren brah
When I was in college I networked with an old grizzly and cynical guy and I said what is some advice you would give a younger guy in your career and he said "This industry is tough, you will get fired in your career and probably multiple times. Always live off your base and bank your bonus for a rainy day"
Any person educated in finance enough to work in IB should know this is a cyclical industry. This is finance basics 101. You chose to join this industry where layoffs happen every downturn. Don't whine.
Well there goes 1
This aged incredibly poorly
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