I'm a Frito-Lay Factory Worker. I Work 12-Hour Days, 7 Days a Week
I used to work as an equity analyst, so have come at this problem from totally the other end.<p>The number one problem, that I have seen no-one talk about, are certain incentives from the market (not short-termism, if someone says that they don&#x27;t understand what is happening).<p>I buy PEP at 15x earnings...I don&#x27;t need a lot of growth to make that price work. Even if they grow a 10-20% over five years, I will probably make a market return. Which is fair.<p>If I buy PEP at 25x earnings plus (roughly where it is today)...that is different. I need earnings to double and then some within five years. Huge imperative for growth. If I don&#x27;t see the growth, I will lose 50%+ on the position.<p>So when the share price is that high, the incentives are out the window. The board is never going to hire the guy who says: well, share price could do with a reset, how about we take a year boys...no, at 25x earnings, they will take the guy who comes into the room ten minutes after his piece, rips his shirt off in the interview, and drinks blood for breakfast. The boys on the comp committee want growth, they will set the 20x salary bonus package accordingly, and the exec team is going to fight like rats in a bag to get the juice.<p>This got very bad in FMCG too because 3G Capital exposed the amount of middle management waste at Heinz and, of course, consumers are consuming less of these unhealthy snacks. No top-line growth, so costs is the only way you can pay out.<p>On the OP, it is deplorable. Investors do not want this. Most fund managers do not have money in their own funds, the PR is horrendous. Companies shouldn&#x27;t treat their workers this way. But...the Fed has pumped up the market, every exec team is feeling joocy on that stimmy, multiples are through the roof...everyone knows it is going to blow but the music is still playing.<p>I have no idea what the solution is, only that lots of people get the incentives totally wrong. Investors aren&#x27;t short-term. Every investor wants the stock they can hold for five, ten, twenty years. But I have seen good companies run themselves into the ground because the comp committee wanted a &quot;stretch&quot; target that was literally impossible (particularly in retail, any company that can grow unprofitably but cheaply will be hung by the comp committee). Companies are even doing % of market cap growth by date X packages now, it is truly obscene (thank Elon). CEOs create these cultish atmospheres because of the incentives of pay (this is true of PEP: afaik, Nooyi was a terrible CEO, made terrible acquisitions to goose the share price, never got challenged, and walks away with $25-50m...if you lose the guys on the floor, you don&#x27;t have a company tomorrow...if you don&#x27;t hire Nooyi, you have saved billions in shareholder value...but it is the latter that is indispensable?).