{"id":64139,"date":"2014-11-24T06:16:44","date_gmt":"2014-11-24T11:16:44","guid":{"rendered":"http:\/\/countingpips.com\/?p=64139"},"modified":"2014-11-24T07:46:57","modified_gmt":"2014-11-24T12:46:57","slug":"how-investors-respond-to-ceo-apologies","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2014\/11\/how-investors-respond-to-ceo-apologies\/","title":{"rendered":"How Investors Respond to CEO Apologies"},"content":{"rendered":"
November 24, 2014<\/div>
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By WallStreetDaily.com<\/span><\/a> \"CEO<\/p>\n

By Robert Williams<\/a>, Founder<\/em><\/p>\n

Boy, was this a bad year for CEOs<\/a> or what?<\/p>\n

CEOs now earn an average salary of $10.5 million, up nearly 10% over the prior year.<\/p>\n

Yet the riches didn\u2019t stop a handful of them from saying incredibly stupid things.<\/p>\n

As I\u2019ll reveal today, when a CEO delivers a mea culpa, it should be treated as the ultimate \u201cSell\u201d indicator.<\/p>

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With that in mind, here\u2019s my list of the DUMBEST<\/strong> CEO apologies of the year.<\/p>\n

I also underscore the subsequent price underperformance of each.<\/p>\n

DUMBEST APOLOGY #1: Mt. Gox CEO, Mark Karpeles<\/h2>\n

On February 17, 2014, Karpeles offered the following apology to Bitcoin traders whose accounts had been frozen by the exchange\u2026<\/p>\n

\u201cWe sincerely apologize for this incident and understand your concern\u2026 [funds] should be able to resume withdrawals soon.\u201d<\/em><\/p>\n

Two weeks after his apology, the entire exchange collapsed.<\/p>\n

Hackers made off with over $460 million in Bitcoins.<\/p>\n

Since that day, Bitcoin has underperformed the S&P 500 by 54.29%.<\/p>\n

(A new threat to Bitcoin and the U.S. dollar just emerged from the shadows. Full story<\/strong><\/span><\/a>.)<\/p>\n

DUMBEST APOLOGY #2: \u00a0AOL CEO, Tim Armstrong<\/h2>\n

Also in February \u2013\u00a0right after AOL Inc.<\/strong> (AOL<\/a>) announced its best earnings in a decade, the company\u2019s CEO made a huge healthcare blunder that had employees in an uproar.<\/p>\n

Armstrong was explaining why the company was delaying contributions to retirement accounts when he brought up the fact that two employees \u201chad distressed babies\u2026 [And] we paid $1 million each to make sure those babies were okay in general.\u201d<\/em><\/p>\n

Unsurprisingly, employees didn\u2019t appreciate that he was blaming sickly newborns on corporate policy changes.<\/p>\n

Armstrong reversed the policy in the face of the backlash and apologized for his comments:<\/p>\n

\u201cWe heard you on this topic\u2026 On a personal note, I made a mistake, and I apologize.\u201d<\/em><\/p>\n

Right after the baby-blaming comments, AOL\u2019s stock dropped more than 10 points.<\/p>\n

DUMBEST APOLOGY #3: General Motors CEO, Mary Barra<\/h2>\n

There are bad CEO apologies, and then there\u2019s the apology from General Motors<\/strong> (GM<\/a>) CEO, Mary Barra.<\/p>\n

Barra had finally addressed the public after 13 people died due to faulty ignition switches \u2013 a tragedy investigators say was preventable. In fact, a Congressional investigation revealed that GM had rejected a proposed fix all the way back in 2005 because \u2013 you guessed it \u2013 the repair was too costly and time-consuming.<\/p>\n

Worse yet, records show that GM first found out about the ignition switch problem 13 years ago, in 2001.<\/p>\n

GM\u2019s official statement in March says that it \u201cdeeply regrets the events that led to the recall.\u201d<\/p>\n

Shareholders certainly weren\u2019t impressed. Since then, shares have underperformed the S&P 500 by 15.68%.<\/p>\n

DUMBEST APOLOGY #4: T-Mobile CEO, John Legere<\/h2>\n

At an event in Seattle on June 18, Legere announced T-Mobile\u2019s<\/strong> (TMUS<\/a>) test-drive program. But he also called out the other mobile carriers for their outrageous data plans.<\/p>\n

Not only did he call them \u201cgreedy bastards,\u201d but he went as far as saying that the industry is \u201craping\u201d its customers. Seriously.<\/p>\n

He quickly apologized for the indiscretion the following day on Twitter\u2026<\/p>\n

\u201cThe drawback to having no filter when I speak\u2026 sometimes I need a filter. Genuinely apologize to those offended last night.\u201d<\/em><\/p>\n

Since then, shares have underperformed the S&P 500 by 20.09%.<\/p>\n

DUMBEST APOLOGY #5: Microsoft CEO, Satya Nadella<\/h2>\n

Microsoft<\/strong> (MSFT<\/a>) CEO Satya Nadella couldn\u2019t have chosen a worse time to voice this pig-headed comment.<\/p>\n

On October 9, Nadella joined Microsoft board member Maria Klawe on stage at the Grace Hopper Celebration of Women in Computing.<\/p>\n

Here\u2019s what he said to Klawe (who also happens to be President of Harvey Mudd College and a computer scientist) on the subject of equal pay for men and women and how women should ask for raises:<\/p>\n

\u201cIt\u2019s not really about asking for a raise, but knowing and having faith that the system will give you the right raise. That might be one of the initial \u2018superpowers\u2019 that women [who] don\u2019t ask for a raise have. It\u2019s good karma. It will come back.\u201d<\/em><\/p>\n

Keep in mind, the \u201csystem\u201d is one where women are paid 78% as much as men. It\u2019s even worse in Silicon Valley, where men with graduate degrees earn 73% more than women with the same qualifications, and men with bachelor\u2019s degrees make 40% more.<\/p>\n

Amid the ensuing commotion, Nadella quickly backtracked:<\/p>\n

\u201cI answered that question completely wrong. Without a doubt, I wholeheartedly support programs at Microsoft and the industry that bring more women into technology and close the pay gap. If you think you deserve a raise, you should just ask.\u201d<\/em><\/p>\n

Talk about a flip-flop.<\/p>\n

If Microsoft\u2019s share price is any indication, investors are distinctly unimpressed with the new CEO\u2019s politically incorrect faux pas. The stock has underperformed the S&P 500 by almost 3% since his comments.<\/p>\n

Onward and Upward,<\/p>\n

Robert Williams<\/p>\n

Founder, Wall Street Daily<\/em><\/p>\n

The post How Investors Respond to CEO Apologies<\/a> appeared first on Wall Street Daily<\/a>.<\/p>\n

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<\/h3>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

By WallStreetDaily.com By Robert Williams, Founder Boy, was this a bad year for CEOs or what? CEOs now earn an average salary of $10.5 million, up nearly 10% over the prior year. Yet the riches didn\u2019t stop a handful of them from saying incredibly stupid things. As I\u2019ll reveal today, when a CEO delivers a […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-64139","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/64139","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=64139"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/64139\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=64139"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=64139"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=64139"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}