Tuesday, August 27, 2013

IBM After Accepting The Goal Of Maximizing Shareholder Value

This article is about the transformation of IBM since 1980.  Everything that the CEO does today is focused on a single metric: earnings per share (EPS).  What has happened at IBM is typical of what has happened in most of our large corporations which have followed the same goal.  The principles laid down by IBM's founder are ancient history.  That transformation at IBM has been good for its executives who receive the bulk of their compensation in the form of stock options.  It has also been good for shareholders.  It has not been good for IBM's employees or the greater community in which IBM operates.  This raises the general question regarding the purpose of our large corporations.  Do they have no other purpose but to grow the stock price?

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