Short-termism is a wolf stalking the equity market
Pay packages that incentivised excessive risk-taking in the pursuit of short-term gains played a central role in the financial crisis. We cannot go down that road again
A share price is the net present value of all future income from that share. And it’s not the bosses who decide what that net present value is either, but the larger market in general. So, if sharebuyers (or sellers) think that management is fucking up the long term for the sake of quick profits today then the share price will fall. Equally, if they think that the management is forgoing short term profits in the expectation of massive future ones then the share price will rise.
That is, the market in general judges the value, not the management.
And we have an example too: Amazon. The company has never made de3cent profits, is currently making a loss, yet the market rates the stock highly. Because they can see that current profits are not being chased but the long term goal of value is.
If markets were short term then how the hell would Amazon have the share price it does?