11–20 of 306 posts
This sort of thing ought to be grounds for a lawsuit from shareholders, or other creditors.
Is there any research claiming that giant executive bonuses, in this case seemingly at the expense of the company they govern, is optimal for some macroeconomic quality that benefits the society at large? Or do we allow this behavior because we believe it is immoral to prevent giant executive bonuses as a matter of principle?
I’m not pro this or trying to justify it. But I just had a thought. Maybe they want to retain the execs to fix the mess? I think most people would start looking for a new job as soon as they heard that the company they work for is filing for bankruptcy. What would happen to a company if all good people left?
You could argue the people responsible for the decisions that resulted in the company going bankrupt aren’t the good people.
Can't creditors go after them in bankruptcy court? If not I see a easy way to make money.
> Under a 2005 bankruptcy law, companies are banned, with few exceptions, from paying executives retention bonuses while in bankruptcy. But the firms seized on a loophole by granting payouts before filing.
I’m not pro this or trying to justify it. But I just had a thought. Maybe they want to retain the execs to fix the mess? I think most people would start looking for a new job as soon as they heard that the company they work for is filing for bankruptcy. What would happen to a company if all good people left?
Then make this a part of their executive employment contract.
I’m not pro this or trying to justify it. But I just had a thought. Maybe they want to retain the execs to fix the mess? I think most people would start looking for a new job as soon as they heard that the company they work for is filing for bankruptcy. What would happen to a company if all good people left?
You could argue the people responsible for the decisions that resulted in the company going bankrupt aren’t the good people.
The execs getting the bonus know that other USA execs won't frown on this. The execs getting the bonus know regulators won't come after them. The execs getting the bonus know the media won't name and shame them. The execs getting the bonus know that nobody in their social circle will shun them. The execs getting the bonus don't even think this is wrong, as the main aim is to grab what you can when you can, and if it'…
It's completely rational. The company is going into bankruptcy. The money can be mine or someone else's. If you had a chance to get $1,000,000 or the bank takes it with no consequences what do you do?
There are many things that are entirely rational to do that we nevertheless don't do. Either due to societal mores or laws, or both.
Is there any research claiming that giant executive bonuses, in this case seemingly at the expense of the company they govern, is optimal for some macroeconomic quality that benefits the society at large? Or do we allow this behavior because we believe it is immoral to prevent giant executive bonuses as a matter of principle?
The other thing to keep in mind is that the 'huge' bonuses usually aren't very large from an income statement point of view; if you bought an extra 0.5% growth (or savings), it was easily worth it.
As to why this is allowed, I think it's seen as a private transaction between well-informed and consenting parties, so there needs to be a compelling reason for legislation and regulation.
I’m not pro this or trying to justify it. But I just had a thought. Maybe they want to retain the execs to fix the mess? I think most people would start looking for a new job as soon as they heard that the company they work for is filing for bankruptcy. What would happen to a company if all good people left?