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On eve of bankruptcy, US firms shower executives with bonuses

reuters.com

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Re: On eve of bankruptcy, US firms shower executives with bonuses

#231

Post by scarface74 »

kelnos wrote: post #205
dehrmann wrote: post #143

Earlier quoted context omitted.

> Nobody wants to try to turn around a bankrupt company at their old salary I'll take it a step further. Even in Chapter 7, you want to retain certain key people so debt holders can get the best return. Sale of assets and negotiating debt won't go as smoothly without those people, and the process could be tied up in bankruptcy court for years. It's a job only specific people would do well it, and it's a job no one wa…

This really just perpetuates the attitude that the only thing that matters is finance, and all the workers can just go pound sand.

It is. The only purpose of a business is to make money. If workers are so hurt by being laid off, that’s not the fault of corporations acting rationally. That’s the fault of our system where the government doesn’t have an adequate social safety net in place. We should stop expecting corporate America to be responsible for “taking care of their employees”.

There job should be to focus on profits and pay taxes to support social programs.

Re: On eve of bankruptcy, US firms shower executives with bonuses

#232

Post by scarface74 »

kelnos wrote: post #216
sokoloff wrote: post #203

Earlier quoted context omitted.

If you’re an employee (key or not) in a company that’s encountering financial trouble (and you aren’t as financially set for life as you desire), you should absolutely understand what options you realistically have and determine if a conversation about your comp is indicated to ensure that your current company keeps your services. It doesn’t have to be a threatening conversation. “Look, I’m trying to understand our o…

> You’re not entitled to be “paid back” for the fact that those options became worthless I absolutely agree with this, and this is why I think the retention bonuses paid out to executives are unethical. If you can tell your employees that they aren't entitled to a compensation fix because their options/stock are now worthless, it's a bit hypocritical to turn around and tell your board/shareholders "hey, my options an…

As I discussed in another post. I was just an IC at a failing company and I was able to get a retention bonus. At the next company I worked at, I found out later that the team leads were given a retention bonus because they knew everyone was looking.

If you are in the tech field, you have the “leverage” to make anywhere from twice to five or six times the average salary. Do you take advantage of it?

Re: On eve of bankruptcy, US firms shower executives with bonuses

#233

Post by scarface74 »

sokoloff wrote: post #206
daniel-cussen wrote: post #65

Earlier quoted context omitted.

Promote internally. That's what generally happens in the military under similar conditions. Xenophon wrote about the march of the 10,000 Greek mercenaries whose officers were murdered by the Persians, inside Persia. They elected new officers, swearing to obey their orders, and fought their way out of Persia, returning the survivors to Greece.

If you thought those internal candidates were better, why didn’t you promote them before? Either you think they’re not, or you think that now you have evidence they are based on the fact that the current execs drove the thing to the brink. That’s a fair piece of data for a lot of cases, but I don’t think that’s the case for a lot of pandemic-shutdown-induced cases that we’re seeing now.

If someone wasn’t thought to be good enough to be a manager in good times, why would they be good enough to be a manager when the company was in crisis?

Re: On eve of bankruptcy, US firms shower executives with bonuses

#234

Post by Ghex »

lend000 wrote: post #81
bpodgursky wrote: post #77

Earlier quoted context omitted.

That's... insane. The point of chapter 11 is that the company does NOT liquidate. Most employees DO NOT LOSE THEIR JOBS. Liquidating a functioning but indebted company destroys any remaining value (there is huge value in the structure of a business -- it's not the sum of inventory and real estate). And most importantly... EVERY SINGLE EMPLOYEE LOSES THEIR JOB There is absolutely no societal value in forcing companies…

Companies generally don't file bankruptcy when they are "functioning but indebted." They file when they can't even afford to make their next (or past-due) debt payment, and no creditors will dare to lend any more to them. Don't you think creditors should have a say in whether a company should be allowed to delete some debt and try to become profitable again? If the company is deep in debt beyond its assets, but the c…

> Don't you think creditors should have a say in whether a company should be allowed to delete some debt and try to become profitable again? Creditors already do have a say don't they? At the moment of filing, director's fiduciary duties expand to residual claimants in addition to shareholders. In addition, creditors have paths to reclaim fraudulent transfers (bonuses included) in court although it is a hard case to win. Creditors can also ask the court to convert to Chapter 7, but this is almost always in no one's best interest (shareholders wiped out, junior creditors wiped out, senior creditors will probably lose a non trivial amount, everyone loses a job).

Re: On eve of bankruptcy, US firms shower executives with bonuses

#235

Post by minitoar »

scarface74 wrote: post #224
II2II wrote: post #95

Earlier quoted context omitted.

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…

Do you make minimum wage? Do you give any excess over minimum wage that you earn to charity? The vast majority of us posting here “make more when others are making less”. Even in your own company you probably make 10x more than the lowest paid contract worker who cleans your office after hours.

This is more like all the contract workers are getting laid off and you give yourself a bonus, then leave the company.

Re: On eve of bankruptcy, US firms shower executives with bonuses

#236

Post by gbacon »

simonh wrote: post #173
mostlyghostly wrote: post #106

Earlier quoted context omitted.

"very few businesses are the product of a small subset of its people" Hate to break it to you but that is EXACTLY what is going on here. Some people have EXPONENTIALLY more impact on saving a business than everyone else in the building. Real world examples: - Two sales people who knew every high profit customer in our local market, which was the core of our turnaround plan - My product engineer, with "the specs in he…

This is the Pareto Principle at work. 20% of the people involved in an enterprise produce 80% of the value. It’s not that you don’t need the other 80% of the people, it’s that it doesn’t matter who they are. If you remove the people in the high productivity group and replace them with people from the low productivity type then the organisation loses (roughly) 80% of its productivity. Replace people in the low product…

If it’s galling for the essential people to be paid more, what’s a fair compensation structure in your view?

Re: On eve of bankruptcy, US firms shower executives with bonuses

#237

Post by koheripbal »

scarface74 wrote: post #223

I don’t really have a problem with this. I’ve never been an executive, but I have seen first hand what happens when a company is in distress. 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. Th…

I've had the same experience.

No one wants to work at a bankrupt low-morale company, so the only way to keep key people was to offer special bonuses for retention to keep things together through the bankruptcy process

If you think about it, it's literally the only way to do it. These folks have usually lost a ton of money on their company stock options. The only way to keep them around is to pay them more in the short term.

Re: On eve of bankruptcy, US firms shower executives with bonuses

#238

Post by gbacon »

darkerside wrote: post #220
TheOtherHobbes wrote: post #210

Earlier quoted context omitted.

And yet 1 - those people were also there when the disaster happened. And yet 2 - good luck getting the business back up to a reasonable operating volume with just those people. And yet 3 - in many failures the people at that level are directly responsible for the failure. Force majeure lightning-strike failures are very much a minority. Many businesses fail because of avoidable mistakes made by poor management. Pleas…

Luck plays into business so much now than people assume. Incomplete information and unpredictable black swan events mean you're not making decisions with certainty. You make the best decision with the information you have, try not to spend more time once you get to diminishing returns, and you hope things work out. Executive talent will not ensure success, but it can raise the odds. But on the other side, a dearth of…

This idea that success is all about, mostly about, or largely about luck is intellectually lazy, is extremely misleading, and stokes envy. None of that benefits society.

To benefit from luck, you have to put yourself in position to get lucky, which does not happen by accident. There is all the difference in the world between good timing and dumb luck. Yes, we can all think of anecdotes where someone did buffoonishly stumble into good fortune, but insisting that this is a fair representative of all cases is the fallacy of composition.

Re: On eve of bankruptcy, US firms shower executives with bonuses

#239

Post by AsyncAwait »

HPsquared wrote: post #182
AsyncAwait wrote: post #164

Earlier quoted context omitted.

So it's not NeXT engineers is it?

Price's Law applies all the way down. It's a small portion of the engineers.

Sure, but isn't the problem that it's also a small portion of the executives, but practically all executives get paid rather well in cases like this?

Re: On eve of bankruptcy, US firms shower executives with bonuses

#240

Post by Supermancho »

waheoo wrote: post #105
II2II wrote: post #95

Earlier quoted context omitted.

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…

> What I am suggesting is that it is immoral to take more when others are given less. You mean like how America takes more than the rest of the world? I think the underlying problem here is that executive salaries and bonuses are at too higher multiples. Much higher than historical norms. Not many would complain about an exec getting a bonus during this time if it was actually reasonable in the first place.

> You mean like how America takes more than the rest of the world?

"Like" in the most obtuse aspect. What about how little I pay my kids or dog? Thats not in context.

The issue is the morality within the system in place in the US (US firms, per the article title).

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