Old School on guidance and Exec stock option Old school the best school?
Note: I found the ideas in this article regarding doing things the old way interesting; especially as they compare and contrast with Yellow. Also note that I am not recommending anyone buy this company. I have no idea whether this article is trying to pump the company as they start to take on debt and increases the risk for the old fundy-dudies who are holding this thing. It's a globe and mail article so......
"And anyone looking for clues on how Algoma is doing isn’t going to get profit forecasts from the company either. Its executives hew to the old-fashioned practice of not offering earnings guidance."
"Algoma has an added shareholder-friendly quirk: It doesn’t have an executive stock option plan because of the Jackman family’s old school view on compensation.
Many managers claim options align interests of executives with shareholders, but another point of view holds that they encourage excessive risk taking, confer rewards as result of general market upturns rather than corporate excellence, and in general give away too much under priced stock to the hired help.
The Jackmans believe executives should receive a competitive salary, have bonuses tied to actual corporate performance, and then, if they wish, buy stock the old-fashioned way, using salary.
This approach means executive buys send a message. Mr. Wight recently picked up another 1,000 shares to bring his total to 5,000. “I believe strongly in the business,” he said of the move. “I bought them with after-tax, Greg Wight money.”
Full article:
https://www.theglobeandmail.com/globe-investor/investment-ideas/algoma-central-a-journey-into-deep-value-territory/article2406851/