221–230 of 306 posts
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If a C level exec joins a failing company accepting stock compensation presumably they understood the risks. Having lost a bet, they could renegotiate a higher salary for future work but hardly need to be compensated for a lost bet on past work.
Exactly! They’re not being paid-back for their past losses. They’re being paid to stay on and do future work to try to salvage things.
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As multiple people wrote: you don't need new execs to join the company, you can promote from withing directors or VPs that already know the business and have all the knowledge on how to run it. If you don't have such people in the company then it's a C level error and the company is doomed anyways.
Five months ago, those people were judged less competent to hold the top spots than the incumbents, as evidenced by the org chart at the time. What’s changed?
I worked for a small company that was on its last legs and had been through rounds of layoffs. Our investors wanted to keep the company afloat long enough to get someone to buy us out.
They made all of us one promise - for every hour we worked, we would get paid and on time.
They made some key employees an offer of a retention bonus to stick around for 6 months or until the company was sold. I happen to be one of those employees because I took over development of a key piece of software after the founder was kicked out. (It was an obscure proprietary system written in C++/MFC with a little bit of assembly and I was the only graybeard that knew enough to maintain it.)
The last thing you want is key employees jumping ship at the time you are trying to either save a sinking ship or at least get some type of salvage value from it.
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I've actually helped manage a company in financial distress. Here's reality: - First, most executives have little impact on the specific event that put the firm under. (I was a senior marketing person; the building burned down. Fire safety was most assuredly NOT within my purview or even something I could ask about) - Running a business in financial distress basically sucks. Take your job and make it 10 X harder. You…
There is no denying that it takes skill and hard work to keep a business afloat in these times, or that it is stressful, or that it is easier to walk away than deal with the situation. On the other hand, very few businesses are the product of a small subset of its people. In many businesses, such as some of the businesses mentioned in this article, it isn't a question of whether those other people can afford to send…
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Exactly! They’re not being paid-back for their past losses. They’re being paid to stay on and do future work to try to salvage things.
These bonuses are pre paid, not compensation for future work.
If you interview with us for 4 hours and get a job offer with a $12K signing bonus and a requirement that it's paid back pro-rated if you leave within 12 months, are you being paid that $12K for the 4 hours of interviewing, out of the goodness of our heart, or $1K/month for each of the next 12 months of work?
Of course they do. How else do you get people to stick around on a sinking ship? You and I wouldn't stay out of some sense of altruism, why would they? Heck, tech companies have to vest stock options over 4 years because most people would take the money and run. What does everyone think happens when everybody quits because there's no reason to work there? The money is just returned to investors? Even if that's all yo…
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Those tasks are handled by people that report into the CxO’s. The executives set broader directions and hire people to keep the lights on. Use the money that would have been executive bonuses for retention packages that make sure the lights stay on. Honestly, even a juicy bonus isn’t going to keep many executives at a sinking ship unless they’re not able to find another job.
> for retention packages that make sure the lights stay on. even you admit that people doing any work in a bankrupting company needs a retention package to continue working - why should the CEO (just another worker in a company) be any different? Why is their retention package somehow less important than the retention package that you proposed for the "keep the lights on" workers?
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?
There is evidence in both directions, but the data isn't great, because one of the reasons that boards offer large bonuses is to attract 'talent' to troubled or stagnant companies (which don't look great on the resume). Jim Collins (author of "Good to Great") has made the case that other factors are much more important. The other thing to keep in mind is that the 'huge' bonuses usually aren't very large from an incom…
I mean, it's not allowed. Part of what we're talking about here is that companies are getting around laws against retention bonuses during bankruptcy by granting those bonuses a week before filing the bankruptcy papers. Society has clearly decided that we don't think this behavior should be legal, but it's hard to close all the loopholes.
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And they also have less incentive to stay because these are supposedly people who could provide the same work for other companies in similar situations at the same or higher prices. I find myself in this situation right now: ill stay on at higher prices if the company wants to renew its contract, or i'll leave for another place (I have more people emailing me for work than I have before the pandemic and I'm not on an…
If I'm at a place where people will lose their jobs if I leave the company the answer is simple: I don't leave until that's either not the case or I personally can't afford it anymore.
I actually liked the company I just left. I liked the people and thought that the people in management up to and including management were all good people. I am usually far more cynical.
Post Covid, they decided to give everyone a pay cut instead of laying off people. This was morally the right thing to do in my opinion. It is a small company and I didn’t feel we had any dead weight.
I knew that in my position, the company would struggle a little bit. But what was I suppose to do? Stay out of loyalty or accept an offer that was a 60% increase in total comp at a more stable company?