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Scapegoating the Zeitgeist

Summary:
To receive a free full-text email of The Zeitgeist whenever we publish to the website, please sign up here. You’ll get two or three of these emails every week, and your email will not be shared with anyone. Ever.It’s been a bad few years for investors in shale companies, but a pretty good few years for shale company CEOs.The leaders of U.S. shale companies received some of the largest executive pay increases in corporate America, even as their shareholders lost billions of dollars, a Wall Street Journal analysis has found.There’s something about Wall Street Journal headshots that make you look guilty.Maybe it’s the black-and-white, maybe it’s the uncanny valley stippling, but whatever it is, I have no doubt that this is why the Wall Street Journal editors used this two-by-two composite of

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To receive a free full-text email of The Zeitgeist whenever we publish to the website, please sign up here. You’ll get two or three of these emails every week, and your email will not be shared with anyone. Ever.


Scapegoating the Zeitgeist

It’s been a bad few years for investors in shale companies, but a pretty good few years for shale company CEOs.

The leaders of U.S. shale companies received some of the largest executive pay increases in corporate America, even as their shareholders lost billions of dollars, a Wall Street Journal analysis has found.


There’s something about Wall Street Journal headshots that make you look guilty.

Maybe it’s the black-and-white, maybe it’s the uncanny valley stippling, but whatever it is, I have no doubt that this is why the Wall Street Journal editors used this two-by-two composite of headshots as the social media image for their broadside against shale company CEO compensation .

Scapegoating the Zeitgeist

Similarly when you dig into the article, the words are just filler for the four individual headshots, together with their cash comp and stock price performance data for the five year period 2015 – 2019.

I mean, you don’t even need to read the article to get your blood pressure up. Tens of millions of dollars every year to each of these guys. Hey, I could do their job for a fraction of that money! Clearly these guys are guilty of … something. But guilty of what?

In the eyes of the Wall Street Journal, the mortal sin committed by these CEOs – all of whom are professional managers, not founders or entrepreneurs – is NOT that their professional managerial compensation is ridiculous and extreme. No, the mortal sin is that it’s off-narrative, that there’s no pleasant veneer of positive “total shareholder return” to justify their professional managerial compensation. We are told that these four CEOs are over-compensated because the stock price is down, not that they are over-compensated, period.

These CEOs violated the “Yay, shareholder alignment!” narrative, and THAT is why they are singled out and hung out to dry by the Wall Street Journal.

These four CEOs are presented as “bad apples” in an otherwise perfectly healthy system of professional management behavior. They are presented as scapegoats for a SYSTEM of massive wealth transfer from shareholders to the professional managerial class.

This article is not an attack on that system. It is a defense. It is telling you that the system is fine … we just need to do something about these bad apple CEOs who do not properly “align” their compensation with shareholders.

One day we will recognize the defining Zeitgeist of the post-GFC Obama/Trump years for what it is: an unparalleled transfer of wealth to the managerial class.

Not founders. Not entrepreneurs. Not visionaries.

Nope … professional managers.

Just don’t expect to find that recognition in the pages of the Wall Street Journal.


About Ben Hunt
Ben Hunt
He is the chief investment strategist at Salient, a $14 billion asset manager based in Houston and San Francisco, and the author of Epsilon Theory, a newsletter and website that examines markets through the lenses of game theory and history. Over 100,000 professional investors and allocators read Epsilon Theory for its fresh perspective into market dynamics.

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