Chapter 3. What’s Wrong with the Current System? Compensation without Long-Term Value Creation

High Compensation without Revenues—Now That’s a Problem

Reflecting on the spate of explosions and implosions during the past few years, selecting stocks based on fundamental analysis seems more difficult than ever.[1] In the late 1990s, some stocks went up without profits and, in extreme cases, without revenues. Spirited M&A activity and soaring compensation didn’t always coincide with stock price increases and the only ones who seem to have prospered were the deal makers, consultants, bankers, and executives who cashed out along the way. The current system seems broke and it’s already attracting the attention of regulators. Change is inevitable ...

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