Thursday, August 17, 2006


Where Are The Shareholders' Yachts?

Some weeks ago on this blog, I marveled at the extravagant new yachts of boss monsters such as Larry Ellison and Paul Allen. Well, as it turns out, a few business pundits believe yacht ownership reflects more than just extravagance. The batting average of a mutual fund manager named Bill Miller has declined lately and, according to Barron's, it's because he bought a yacht. Yachts are apparently a sign that a man has so much money he has no idea what to do with it - or that he may not be especially hungry to make any more and is now content to just spend the vast billions he has. Perhaps. Still, it is intriguing that Oracle has been underperforming on Wall Street since Larry Ellison bought his yacht, and that Charter Communications has taken a nose dive since Paul Allen - Charter's chairman - bought his Octopus. Needless to say, the notorious spendthrift Dennis Kozlowski had a yacht as well.

I believe that yacht ownership signifies more than either mere extravagance or a once diligent tycoon slacking off. It is yet another symptom of the dread disease that is taking over American boardrooms - acromegaly of the executive paycheck. But it doesn't really matter what your attitude is towards this phenomenon. The results are the same. The shareholders are shafted regardless whether the CEO earns too much money or he doesn't work hard enough. And any theory that discredits the excessive personal spending of a CEO will discredit his excessive personal income by extension, and that is a trend that I heartily applaud.

"The CEO Bought a Yacht? Then It's Time To Sell" from Slate

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