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Biotech / Medical : NNVC - NanoViricides, Inc. -- Ignore unavailable to you. Want to Upgrade?

To: HardToFind who wrote (3371)	12/12/2014 7:14:42 PM
From: drkaz	Respond to of 12871

"If there is reason to believe that the business has been permanently and irreparably impaired by the actions of management, then yes, get a new management team or sell the business assets and go home. But why get rid of a good management team just because the market is fickle about your stock?" Excellent point again HTF. And I would argue that in this case - the market is being fickle, or at least is hedging some, about NNVC's stock. A couple of successful milestones reached - and a lot of this concern should fall by the wayside.

To: HardToFind who wrote (3371)	12/15/2014 2:50:07 PM
From: HardToFind	Respond to of 12871

IMO, it can be quite counter-productive to measure a CEO's effectiveness directly by the share price. There is little a company's management can do to influence the short-term share price that will have a lasting positive impact on the business. A stock's short-term price fluctuation is mainly a function of the number of sellers vs. buyers at a given price. Many things that impact that ratio in the short term are beyond what the company has direct control over. And many of a CEO's activities that might have a modest immediate positive impact on the share price in the short run [talking up the stock with PR blitzes, attempts to go after naysayers, buying back stock or otherwise acting to punish short sellers, etc.] are counterproductive in the long run. They create volatility in the stock and degrade confidence in management. Warren Buffett always ties the cash bonuses of Berkshire Hathaway business managers to operational goals, and refuses to tie it to options or share price. Generally, the best way to manage the share price in the long run is to ignore the share price in the short run and manage the business. I will admit that there are specific situations, for instance when you are in the midst of doing an equity offering, where you might do well to make a reasonable attempt to stabilize the share price and counteract manipulations of your stock...but day-to-day it is a waste of time and effort, IMO. There is an old story of B. F. Skinner, and research on pigeons that has some applicability for why you don't want to hold a CEO accountable for something he has very little control over (e.g., short-term fluctuations of the stock price): ---------------------- Supersition in the Pigeon [excerpts from wikipedia on B. F. Skinner] One of B. F. Skinner's experiments examined the formation of superstition in one of his favorite experimental animals, the pigeon. Skinner placed a series of hungry pigeons in a cage attached to an automatic mechanism that delivered food to the pigeon "at regular intervals with no reference whatsoever to the bird's behavior." He discovered that the pigeons associated the delivery of the food with whatever chance actions they had been performing as it was delivered, and that they subsequently continued to perform these same actions. One bird was conditioned to turn counter-clockwise about the cage, making two or three turns between reinforcements. Another repeatedly thrust its head into one of the upper corners of the cage. A third developed a 'tossing' response, as if placing its head beneath an invisible bar and lifting it repeatedly. Two birds developed a pendulum motion of the head and body, in which the head was extended forward and swung from right to left with a sharp movement followed by a somewhat slower return. Skinner suggested that the pigeons behaved as if they were influencing the automatic mechanism with their "rituals" and that this experiment shed light on human behavior: The experiment might be said to demonstrate a sort of superstition. The bird behaves as if there were a causal relation between its behavior and the presentation of food, although such a relation is lacking. There are many analogies in human behavior. Rituals for changing one's fortune at cards are good examples. A few accidental connections between a ritual and favorable consequences suffice to set up and maintain the behavior in spite of many unreinforced instances. The bowler who has released a ball down the alley but continues to behave as if she were controlling it by twisting and turning her arm and shoulder is another case in point. These behaviors have, of course, no real effect upon one's luck or upon a ball half way down an alley, just as in the present case the food would appear as often if the pigeon did nothing—or, more strictly speaking, did something else. This experiment was also repeated on humans, in a less controlled manner, on the popular British TV series Trick or Treat, leading to similar conclusions to Skinner.