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RWH033: Lessons From Buffett & Berkshire w/ Chris Bloomstran
We Study Billionaires - The Investor’s Podcast Network
The role of capital structure and CEO incentives in business growth
CEOs are primarily driven by their compensation packages, which often focus on growing EBITDA and the top line. This incentivizes them to be more tolerant of leveraging the business, as they are measured before factoring in interest expense. However, this approach can put the business at risk. CEOs have a limited time in the captain's chair, typically around four and a half years, during which they aim to maximize their earnings through short-term strategies like increasing stock prices and conducting share repurchases.
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