Timothy Noah: CEOs are a Better Investment than Their Companies

Timothy Noah writes in The New Republic:

In 2022, by comparison, the stock market fell even though the larger economy was in good shape. This was a reversal of the Covid spring of 2020, when the economy went into the toilet yet corporate profits zoomed upward. In 2022 the economy recovered briskly and it was corporate profits that fell, especially in the tech sector. The Covid pandemic was receding, making people less dependent on web services, and Mark Zuckerberg’s crusade to lead humanity into the metaverse flopped. The cost of labor rose, and so did interest rates, diminishing capital investment. All the S&P 500 could think to do in response was increase stock buybacks, which for the first time exceeded $1 trillion. The stock market tanked anyway.

Were corporate executives held to account for this declining performance? You might as well ask whether pigs can fly. As I noted in October, between January 1978 and January 2021, growth in CEO compensation outpaced growth in the S&P 500. If you could invest in chief executives, you’d get a better return than you can by investing in the companies they run.

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