CEO's objective is not to Increase share holders value

I have been a CEO now for over three years, and the first thing you learn or you hear when you become one is "your main objective is to increase shareholders value". One need to be careful how this statement to be interpreted, especially in times where the notion "Financialization" is all the hype.

Its a fact that the richer are becoming richer and the poor are becoming even more poor, the rise of inequality since 1980 is staggering, and this mainly to do with how our financial systems are being regulated. Its a fact that the financial systems are rigged in such away it has nothing to do with economy growth, bigger percent of cash is being traded in assets (stocks, bond, real estate etc), rather the old fashioned way of banks taking risk to new business & start ups that actually have something to offer in the means of economy growth (more jobs, better salary etc..)

Can you blame the banks?. why should you, they are getting richer with their very low risk approach, supported by complacent regulated system, that the banks themselves are responsible in lobbying. But at some point the balloon will burst. Remember the 2008 crisis, and the Asia financial crisis before that. So why are they still doing the same mistakes twice, thrice and quadruple, the answer is simple, GREED

This brings me back to the subject in hand, CEOs are under tremendous pressure to increase share holders value as soon as possible, otherwise they get the boot. And the best way to do that is using the financial system in place to manipulate for a short term gains. For example, instead of using the cash profit the company made to better the company's performance, CEO are opt to take loans instead, due to the fact, taking loans is far much cheaper, and it won't effect the shareholder value. CEOs are going as far as getting loan just to buy back its own company stocks, which pushes price up and you got it, increase share holders value. What makes it worst, its in the benefits of CEOs as well, many of CEOs are paid in shares and stocks, some as much as 70% of their total package, so its in their own benefits to reap the short term gains as much as possible

But this approach, even though its effective in short term, but in a long term is something different all together, for one simple argument, companies these days are becoming more as a financial institutions rather than focusing on their core objectives and why they become successful to begin with. CEO spend less and less times with running the company and focus shifts totally to how to manage the cash to better shareholders value and increase that CEO pay check.

The funny thing is, during financial and economical crisis, its the big companies and the so called paper money wealthy shareholders are hit the most, and many end up filing for bankruptcy. Its no strange that 85% of Fortune 500 companies fail in the first 15 years. But on the other spectrum, the companies that survive are the ones didn't loose sight what is important

So what is important you may ask?. the answer is simple, CEO main objective is not to increase shareholders value, its main and the only objective is to fuel the economy, create as much jobs as possible for as long as possible. And this can only be done by creating a healthy working culture, top notch work ethics, superior customer care, and this intern would automatically increase and most importantly sustain employees motivation and innovation which are they corner stone for any company longetivity and survival, and the beautiful thing about this approach, if addressed in correct manner it would definitely increase shareholders value for many many years to come.