December 23, 2015 6:41am
RegMed’s pre-open, time to measure share pricing against CEO and BOD pay and insider holdings
Why do we tolerate CEO pay soaring as share prices decline? Compensating for failure makes no sense!
Be ready, CEO pay and share pricing comparisons will be a source of controversy and investment measurement in 2016! BODs also better understand they can be held responsible for their actions or non-actions!
I provide intelligence and analysis for short and near-term investment. Subscribe or take your losses without complaining …
Critical information ahead of “our” universe’s open!
DOW futures are UP +0.1% and NASDAQ futures are UP +0.2%
U.S. stock futures pointed to a third straight session of gains on Wednesday, with a raft of fresh economic data ahead that may provide some momentum as markets wind down the holiday-shortened week.
European markets traded higher with the pan-European STOXX 600 up 1.5% higher.
Asia stocks ended mixed in quiet trade on Wednesday. Markets in Japan were shut for the Emperor's Birthday. The region is expected to see quiet trading for the rest of the week amid the Christmas holiday break. Australia, Hong Kong, Singapore and the Philippines will be open for a half-day on Thursday while Japan and China will be the only major markets open on Friday.
Data docket: There will be lots of economic readings for investors to assess on Wednesday. At 8:30 a.m. ET, personal income and consumer spending data for November come out, forecast to rise 0.2% and 0.3%. At the same time, a reading on core inflation in November is due, expected to tick higher to 0.1%. A report on durable-goods orders also comes at 8:30 a.m. ET, with orders forecast to have slipped 1.1% in November. Durable goods orders have been sluggish through much of the year. At 10 a.m. ET, the consumer sentiment report for December is on tap. Forecasts are for an improvement to 92, up from 91.8 in the preliminary reading. New home sales data for November are due at the same time. Existing home sales data out on Tuesday showed resales plunged 10.5% in November to the slowest pace in nearly two years.
The RegMed sector closed NEGATIVE on Tuesday, POSITIVE on Monday, Friday, Thursday and last Wednesday.
Tuesday closed NEGATIVE with 29 decliners, 13 advancers and 1 flat following Monday’s POSITIVE close with 15 decliners, 25 advancers and 3 flats;
You’ve made it to the office, turned on the monitor having just gotten your coffee and it hits you … what are today’s … trades?
- Don’t expect much … it’s Christmas week and “players” are dispersing
Exorbitant executive pay must be curbed within the operating expense category an aligned with share pricing.
- But we won’t fix the problem until we address the nature of the corporate structure and the entwined Boards of Directors (BOD) and their roles as provided by codes of conduct and governance principles!
What happen when a company “dismisses” a CEO without the usual … “pay-off” board members should be held accountable for their complicit actions or non-action?
- Do you think a few other CEO’s and members of BODs would “wise up” and start to truly represent stakeholders.
To succeed in the New Year, CEO and BOD members will have to show real vision – not a herd mentality and a flexibility that fosters stakeholder familiarity i.e. integrity.
- The first commandment must be to seek-out what stakeholders need and perceive, then listen, hear what shareholders are saying and then act on their interests!
CEOs and BODs … better start understanding the potential power of investors to execute change starting with elevating voice that might be heard as far away as … Delaware!
- A CEO and its BODs are the face of the company. If they or someone else can destroy that image, it does significant damage to the company's reputation and its share price! Bad decisions can force a BOD deletion if a member is NOT fulfilling their role.
Too many BODs are “intertwined” by personal relationship to the CEO that they’re supposed to be watching over!
- Chief financial officers (CFOs) also have a fiduciary responsibility to investors and can also be held to a legal accountability if they do not bring irregularities that contribute to the financial risk of the corporation to the forefront.
Ocata Therapeutics’ (OCAT) recent “travails” should be reviewed and a lesson learned as well as other companies whose CEO’s “reputation and standing” could also be soon in the fire!
Also, what perception is created when a BOD member resigns <with or without the usual flowery exultations> ... casting doubt about the direction and expectation of the CEO, the BOD and the corporation itself?
The Bottom Line: Paying for share pricing results make perfect sense!
Wednesday’s indications:
- It is time for … ACTIVISM in the New Year 2016!
Signing off for the holidays, hope you gave yourself a personal present - the key to RegMed investing success – a SUBSCRIPTION!
Opinions expressed are those of the author and are subject to change, and not intended to be a forecast of future events, a guarantee of future results, nor investment advice.
Whether information or intelligence is good, bad or somewhere in between; I put into context what is relevant and useful for investors.
Henry McCusker, the editor and publisher of RegMed Investors does not hold or have positions in securities referred to in this publication.
