On My Mind – You’re Fired! – Shareholders ought to decide. – ($$$) – [decision markets] – by Robin Hanson – (Print: 2006-10-30) – 2006-10-13
My idea: Set up two new stock markets where investors would be making not outright bets on the future of a company but conditional bets. In one market the trades are consummated only if the current chief executive remains in place at the end of the current quarter. In the other market the trades are consummated only if the incumbent is bounced out by the end of the quarter. The price spread between these two markets would send a signal about whether the boss should stay or go.
A longer excerpt of his Forbes Op’Ed is posted at CFM.
What’s Your Take On His Proposal?
Not a problem for my (completely untried and untested) ‘contingency market’…
Why are boards so slow to fire the chief? One reason is that they don’t have enough skin in the game. They own few shares and therefore don’t feel obligated to protect their investment from an out-of-touch boss. Besides, most of them owe their cushy jobs to the chief executive.
-Robin Hanson,
George Mason University
http://hanson.gmu.edu/press/CorporateBoard-1-07.txt