A complex issue, better viewed in a holistic than in a mechanistic manner. This (long) essay covers how a business owner, not renter, thinks about and acts on this issue.
I think, it is well understood if one understands the difference between a "marriage" and "Live-In". Your outlook is fit for those who have tied a knot for a long term relationship, where the role of a "marriage counselor" is important but limited. Those , who are in "live in "( like the institution holding hundreds of companies) need the counselor more & hence relies on them.
By the way, I feel your article is also useful to young employees in dealing with the differences, they face in the organizations. After all, Investing is just a part of everybody's life.
Thanks for the insightful and wise commentary :) Great read on a balanced and aligned long-term relationship
This particular episode of Lal's appointment + comp is at an interesting cross road of right to ask (looking at the 10-15Y history of the firm and the strength of the brand/ franchise, clearly top 1% percentile of value creators) + short-term business performance over last 3-4Y (again edging the renters) + pattern of unsuccessful management changes (RLR, Vinod Dasari) which makes the idiosyncratic judgement even more important.
Like this particular quote above: "While we table concerns only where an action falls under a historic pattern with poor odds, we recognize that we could be wrong."
How would you think about allocation of the compensation itself into short term (cash), medium term ( bonus, milestone based payments, options, convertibles) and long term (bought shares, preferences etc.). Obviously in an ideal world, it should be near 100% on the last but not everyone is WB. Would you leave it to the judgement of the promoter entirely ?
We have no formal view to share & always leave it to promoter/companies. Personally, I dislike options & stock-based compensation. It violates principle of tying compensation to controllable factors since markets are nuts for uncomfortably long periods & it's very hard to structure it in a way that overcomes this problem.
Get it. but cash <<< long term options (3-5 years) <<< bought stock with own money/earned compounded returns. Beyond a point, even good promoters look for liquidity to unbundle some of their lifestyle needs from networth in the stock (Like in lal's case). I wonder if there's enough thinking around that - if i earned you 40% a year for 10 years, what mix of stock and cash is a good start ? sort of like in banking, a framework towards intended optimal outcomes -
Superb read. One of best. Thanks.
I think, it is well understood if one understands the difference between a "marriage" and "Live-In". Your outlook is fit for those who have tied a knot for a long term relationship, where the role of a "marriage counselor" is important but limited. Those , who are in "live in "( like the institution holding hundreds of companies) need the counselor more & hence relies on them.
By the way, I feel your article is also useful to young employees in dealing with the differences, they face in the organizations. After all, Investing is just a part of everybody's life.
Thanks for this wonderful writing.
i loved reading this article and a good perspective. thanks.
Thanks for the insightful and wise commentary :) Great read on a balanced and aligned long-term relationship
This particular episode of Lal's appointment + comp is at an interesting cross road of right to ask (looking at the 10-15Y history of the firm and the strength of the brand/ franchise, clearly top 1% percentile of value creators) + short-term business performance over last 3-4Y (again edging the renters) + pattern of unsuccessful management changes (RLR, Vinod Dasari) which makes the idiosyncratic judgement even more important.
Like this particular quote above: "While we table concerns only where an action falls under a historic pattern with poor odds, we recognize that we could be wrong."
How would you think about allocation of the compensation itself into short term (cash), medium term ( bonus, milestone based payments, options, convertibles) and long term (bought shares, preferences etc.). Obviously in an ideal world, it should be near 100% on the last but not everyone is WB. Would you leave it to the judgement of the promoter entirely ?
We have no formal view to share & always leave it to promoter/companies. Personally, I dislike options & stock-based compensation. It violates principle of tying compensation to controllable factors since markets are nuts for uncomfortably long periods & it's very hard to structure it in a way that overcomes this problem.
Get it. but cash <<< long term options (3-5 years) <<< bought stock with own money/earned compounded returns. Beyond a point, even good promoters look for liquidity to unbundle some of their lifestyle needs from networth in the stock (Like in lal's case). I wonder if there's enough thinking around that - if i earned you 40% a year for 10 years, what mix of stock and cash is a good start ? sort of like in banking, a framework towards intended optimal outcomes -