Ann: Quarterly Activities/Appendix 4C Cash Flow Report, page-78

You are right. A checkout operator only earns around 30K, and is only responsible for a pleasant procedure when the customer pays and to make sure the cash register balances at the end of the shift. He / she ought not to produce a loss.

HLF management however is responsible for much much more; within the purview of an investor: developing product, and market, growing sales, producing profits, deploying the capital at it most productive use. If this is done well, it results in a high share valuation. It is that share valuation that sums up how good a companies management is in a given environment.

Yet, HLF's management efforts are best described like this graph:


Now, the question is: Was this foreseeable? Obviously not for all loyal holders and participants in CRs.

The next question is: How much should management be paid that produces such a chart? Obviously NIL, but that is only or mostly clear in hindsight. Management clearly failed in every other metric (but sales growth), remembering that a SP is the sum of all efforts. The SP tells the value.

This is also a management that participated in full at 6.8 cents at the last CR. In a weird sense, they paid in (by participating) and paid themselves out via remuneration; akin to left pocket to right pocket; even the tax regime - and that is kind of funny - is some what neutral: taxes paid on remuneration can / could be matched with losses on the investment (depending on the investment vehicles).

The argument against paying little to management is: If you peanuts you get monkeys. ... and monkeys apparently would not be good at managing a listed company. Yet, could the capital destruction be worse with a monkey at the helm? The answer would clearly be YES!

But would a monkey as CEO be a bad thing? The difference would be that the capital destruction would have been immediate or instantaneous, thereby saving multiple CRs and resulting in a smaller accumulated loss. That would arguably a better outcome.