LogFAQs > #936875431

ssjevot posted...

I believe their CEO is getting no compensation currently and all executives are taking big pay cuts. A lot of companies don't run very large excess revenues because of the nature of modern business practices (if you have a bunch of money just sitting around doing nothing shareholders will demand it get invested or paid to them in dividends). Not a fan of Disney but they likely don't have much of a choice after a while.

This.

Our current corporate finance culture is designed in a way that a company has to be utilizing every penny it has, so it's not allowed to keep reserves of money anywhere. Shareholders like to see the money being used for something. The best companies can do in a pinch is liquidate some assets, but even that has negative implications for their stock price, so it's only seen as a last resort.

I honestly find the current corporate finance system ridiculous when you really think about it. A company has to continue growing, otherwise it's seen as a failure and stocks go down. For example, if a business makes in profit (completely arbitrary numbers) $1.50 one year, $1.75 the next year, $1.70 the year after that, $1.80 the year after that, then $1.79 the year after that, it's considered a struggling business because of the two years profits went down. Even though its trending up, and most small business owners would be happy to see this type of steady growth, shareholders don't like to see this.

I went off-topic there, but I took a finance class recently and this stuck out to me.

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