On eve of bankruptcy, US firms shower executives with bonuses • Hacker News Board

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

#251

Post by koheripbal » Sat, Jul 18, 2020, 2:13 PM UTC

kelnos wrote: post #226

JoeCortopassi wrote: post #44

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…

If we're just talking about liquidating a company and distributing its assets to creditors, that's a pretty normal, mundane, boring job that's handled capably by your garden-variety team of lawyers and accountants, who will work for normal salaries in their fields to do that job. Overpaid executives and retention bonuses are not required in the least.

That's not really true. Companies need to shut down in annorfanized fashion, even under chapter 7.

Under chapter 11 though you need as few personnel changes a possible if you want to turn things around. Domain knowledge and understanding on internal company processes is key.

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

#252

Post by fred_is_fred » Sat, Jul 18, 2020, 2:14 PM UTC

lend000 wrote: post #27

While it looks immoral if you don't understand the mechanics, people are simply responding to incentives around bankruptcy laws. Nobody wants to try to turn around a bankrupt company at their old salary (with their old RSU's and options now worthless). The real question is, should Chapter 11's even be allowed for corporations (as opposed to Chapter 7)? Shareholders vote for these because they know that in a Chapter 7…

Maybe, just maybe, the same executives that lead into bankruptcy aren't the right ones to lead out of bankruptcy - and should not be rewarded for failure?

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

#253

Post by devmunchies » Sat, Jul 18, 2020, 2:16 PM UTC

eat_veggies wrote: post #244

There are so many comments in this thread justifying this behavior. > The last thing you want is key employees jumping ship > Of course they do. How else do you get people to stick around on a sinking ship? > While it looks immoral if you don't understand the mechanics, people are simply responding to incentives around bankruptcy laws Do people really believe that the mechanics of bankruptcy laws, and the incentives…

>...are just part of the natural order of the universe? That they appeared out of nowhere, align perfectly with morality...

Do you think morality is part of the natural order of the universe? It’s definitely not.

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

#254

Post by jzb » Sat, Jul 18, 2020, 2:17 PM UTC

koheripbal wrote: post #237

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 shor…

"The only way to keep them around..."

I call BS. It's not as if there's a shortage of employees or execs to go around right now. When a company is taking its lumps, the execs should too. That should be part of the deal. If the people who actually do the work are getting laid off or asked to double their efforts to compensate for people laid off, then the execs ought to be content to ride out a period without bonuses and work to make those stocks rise in value again.

As usual, when things are good - execs see the profits, the vast majority of workers don't. When things are shit, the execs hand themselves bonuses while they cry crocodile tears about laying people off to please shareholders. Fuck them.

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

#255

Post by koheripbal » Sat, Jul 18, 2020, 2:17 PM UTC

ipnon wrote: post #7

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 shareholders are willingly paying this money because they believe it's the best way to turn the company around.

It's their money, and their decision.

Where do you get off say "are WE going to allow it?". Who the hell are you?

This whole thread is people who don't understand the context of these decisions. The public has no say.

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

#256

Post by jzb » Sat, Jul 18, 2020, 2:21 PM UTC

koheripbal wrote: post #241

II2II wrote: post #80

Earlier quoted context omitted.

> Nobody wants to try to turn around a bankrupt company at their old salary (with their old RSU's and options now worthless). Why not? These executives are paid considerably more than rank-and-file employees under normal circumstances, yet still manage to get bonuses when things turn sour. In contrast, that rank-and-file will be expected to take a pay cut, work more, or lose their livelihood. It flies in the face of…

No, you don't understand how bankruptcy works. ALL key employees needed to keep things going through the bankruptcy process are paid more. You are under the impression that companies love throwing money at executives, but just like regular employees, companies only pay the minimum they NEED to pay them to keep them around. Why on earth would shareholders accept throwing money away to executives???? you position isn't…

"You are under the impression that companies love throwing money at executives, but just like regular employees, companies only pay the minimum they NEED to pay them to keep them around."

Only because we have a system where every company - you know, controlled by execs, and a board made up of execs or former execs from other companies - tell this tale.

We have to stop pretending C-level and VP-level people are special rare unicorns that are the only people who could possibly do this very difficult work. That's bullshit.

It's a self-perpetuating club that keeps voting itself the majority of the pie and keeps telling the myth that, by golly, that's the way it has to be or they just can't keep good talent.

If the majority of companies stop showering these assholes with bonuses they'll fucking stay put and be happy to have a job like the rest of us when times are hard.

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

#257

Post by jonahbenton » Sat, Jul 18, 2020, 2:26 PM UTC

eat_veggies wrote: post #244

There are so many comments in this thread justifying this behavior. > The last thing you want is key employees jumping ship > Of course they do. How else do you get people to stick around on a sinking ship? > While it looks immoral if you don't understand the mechanics, people are simply responding to incentives around bankruptcy laws Do people really believe that the mechanics of bankruptcy laws, and the incentives…

No, they are not part of the natural order of the universe, but with respect, thinking about this in "ruling class" terms is completely wrong.

Neither word "ruling" nor "class" means anything in modern Western society, and neither do the two of them together. Using inaccurate and imprecise language commits two sins- fails to communicate why things are and fails to elucidate how they might be changed.

The word owner has precise meaning, as does the word creditor. This behavior is entirely about protecting the interests of owners and creditors. Sometimes people/orgs playing these roles are large and powerful but often they are not.

There is a huge literature here. The most recent best book I've read on these issues is Katarina Pistor "The Code of Capital."

Highly recommend pursuing a path to adopt more precise language on these matters. Cheers.

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

#258

Post by falcor84 » Sat, Jul 18, 2020, 2:27 PM UTC

devmunchies wrote: post #253

eat_veggies wrote: post #244

There are so many comments in this thread justifying this behavior. > The last thing you want is key employees jumping ship > Of course they do. How else do you get people to stick around on a sinking ship? > While it looks immoral if you don't understand the mechanics, people are simply responding to incentives around bankruptcy laws Do people really believe that the mechanics of bankruptcy laws, and the incentives…

> ...are just part of the natural order of the universe? That they appeared out of nowhere, align perfectly with morality... Do you think morality is part of the natural order of the universe? It’s definitely not.

I'm not going to take a side here, but there would be quite a few philosophers, legal professionals and political scientists who would argue that.

Wikipedia would be a good starting point - https://en.wikipedia.org/wiki/Natural_law

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

#259

Post by jzb » Sat, Jul 18, 2020, 2:29 PM UTC

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.

"Not many would complain about an exec getting a bonus during this time if it was actually reasonable in the first place."

This right here. If the CEO made, let's say, five times what I do - or some reasonable multiple during normal times, I wouldn't object to some retention bonus to maintain as much stability at the top as possible.

I acknowledge that 1) C-level and VP-level gigs come with responsibilities I would not want and 2) a good exec is hard to find. So I don't mind if company execs make much more than I do.

I do mind bullshit like this where they make in a year or two what I can expect to make over more than a decade, maybe even a lifetime, and then when times are hard get showered with more money while we get laid off or end up doing twice as much to cover for people laid off or hiring freezes.

Yep, being an exec of a company that's bankrupt probably sucks. Guess what? Being a average employee sucks then too. Everybody should have to suck it up, not just the run of the mill people.

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

#260

Post by [deleted] » Sat, Jul 18, 2020, 2:29 PM UTC

jonahbenton wrote: post #257

eat_veggies wrote: post #244

There are so many comments in this thread justifying this behavior. > The last thing you want is key employees jumping ship > Of course they do. How else do you get people to stick around on a sinking ship? > While it looks immoral if you don't understand the mechanics, people are simply responding to incentives around bankruptcy laws Do people really believe that the mechanics of bankruptcy laws, and the incentives…

No, they are not part of the natural order of the universe, but with respect, thinking about this in "ruling class" terms is completely wrong. Neither word "ruling" nor "class" means anything in modern Western society, and neither do the two of them together. Using inaccurate and imprecise language commits two sins- fails to communicate why things are and fails to elucidate how they might be changed. The word owner h…

[deleted]