If the CEO Owns a Yacht, Should You Sell the Stock?

1) CityFarmer -Hey! We had similar experiences As a buyer, I always laugh when I see big cars and "grand palaces" when we visit potential suppliers pitching for our business. It's a dead give away I can press prices down for a "short" term relationship.

2) Jacmar - My points exactly

That's a great way to weed out the "free-loaders"

Quote:“We find that if people carefully monitor their own spending and are restrained in their own decision making, they will do the same on the job,” he said. "They tend to run a very tight ship."

Warren Buffett would certainly agree.

Why do you think companies run by free-spending CEOs tend to get into trouble more?

-By CNBC's Robert Frank

http://www.cnbc.com/id/47767189

So warren buffet owns a jets so everybody shud dump his company shares then?

My opnion is these larger than life people are very difficult to intepret, for one thing if you look at all the people who started out from nothing and became wealthy they are secretive, they know with their wealth and power there are always people watching them and plan their moves very carefully and quietly. It's very hard to understanding why doing what they did.

I remember mention this before, there was a time when the late Mr Khoo Teck Puat delisted goodwood park hotel, unloaded shares in various companies, during the time he did these things I remember there were lots of speculation in the news, some say he was trying to raise money for other ventures but nobody knew or could understand what he did or why he did those things at that time it just made no sense then about a year later he passed away. Then only people start to realise he could actually have been doing house cleaning.

After the late Mr Khoo I started observing these wealthly people, it's an exercise in futility I will say.

I know of one Singapore listed company where the CEO owns a yacht. SG Medical, if I recall correctly. My answer to the question posed by the title of this particular thread is in this case.................... a resolute yes.

Not vested ........... in either SG Medical or a yacht. I find both prohibitively expensive.

(12-06-2012, 04:01 PM)sgd Wrote: So warren buffet owns a jets so everybody shud dump his company shares then?

As far as i know, Warren Buffet does not own a jet. He own a jet company, he is using the service of his own company

Nothing wrong if the owner spends $ on a luxury. He works hard for his company.

St****** Ow Chio Kiat pays $2000 for a pair of shoes from his own pocket. I dont see a problem too...

My version of it will be.. If you see your CEO constantly appearing in Tatler magazine, sell the stock.

Check out how many times the Wiluans appear at these social events. I think that's worse than owning a yacht.

IMO, the key point is the prudence with company finance by CEO, rather than his/her personal spending habit.

As long the company finance been managed with prudence, i will rather ignore the CEO personal spending habit

definitely, it does not make any sense to sell a piece of wonderful stock just because the CEO likes to splurge on luxury to reward himself. The better questions might be is he spending more than he earns, or is it simply that he is earning too much as compared to the profits the company is generating?

I am guessing maybe there is a tax angle here for the reasons they buy these things, anyway every year need to pay company taxes right? So maybe try to reduce or mitigate

claim entertainment expenses in company name buy residential property or car in company name for business use.

(13-06-2012, 11:33 AM)CityFarmer Wrote: IMO, the key point is the prudence with company finance by CEO, rather than his/her personal spending habit.

As long the company finance been managed with prudence, i will rather ignore the CEO personal spending habit

Totally agree on this . however i would draw the line if he/she is a heavy gambler at the casino.we want conservative CEOs and not big risk takers running the firm.