Let's be clear here, "firms" are not thinking, sentient things.
"On the eve of bankruptcy, US executives shower themselves with bonuses"
On eve of bankruptcy, US firms shower executives with bonuses
261–270 of 306 posts
Re: On eve of bankruptcy, US firms shower executives with bonuses
#262Earlier quoted context omitted.
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…
Tacit, institutional knowledge is what is being paid for. Not just people who can do a job, but people who already know the nuances of the job.
If you’ve ever worked in management you know the ramp up period to being effective is months, not days. In bankruptcy every day matters.
Re: On eve of bankruptcy, US firms shower executives with bonuses
#263Earlier quoted context omitted.
Eh, you're not getting just how deep in the shit we were. Sometimes you can't give everyone a pony. There simply wasn't any money. That's the essence of running in financial distress. No banks, no loans, insurance support payments got swiped by other people we owed money to... You're running on the cash in the till. We started with 500 jobs, most of which were union gigs with benefits. About 50 were still with us a w…
I think part of the question is: why try so hard to save the company at all? If 90% of the people working there ends up out on the street anyway, what's so special about the company itself that warrants showering money on the remaining 10% to try to keep it afloat? Why not let it fail, and those 50 people -- if they really are so high-performing -- will quickly find jobs with other firms. Some of them might even opt…
A good question. Here's an attempt at a reply..
- You're trying to retain 5, not the 50.. the other 45 are objectively not-critical to the enterprise (in the sense we could eliminate or replace those roles).
- A large fraction of the 45 are basically screwed in the job market; most of them were older, had decades of very specific experience, or had worked their way up in an organization that valued effort/loyalty over credentials. Milking another decade of work in their current role has life changing consequences for these workers and their families. Many of them were primary breadwinners in a bad area, so their job was the last line of defense between a respectable lower-middle class existence and the trailer park for them and their kids.
- Current reality was not reflective of long run potential. If we could stabilize the business, not only would the 50 jobs in question be preserved but there was an opportunity to rebuild and hire back. (feel good moment: this actually occurred. The team was able to restart key areas of the facility and we rehired some manufacturing people)
Young, highly educated people have no concept of the degree of privilege they enjoy in the labor markets. That degree opens doors and you don't get tossed out the instant some hiring manager sees a little grey hair. You don't have 30 years of experience which immediately becomes the leading reason NOT to hire you for a job because someone thinks you're incapable of learning anything new.
Life basically sucks past 50...
Re: On eve of bankruptcy, US firms shower executives with bonuses
#264Earlier quoted context omitted.
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…
> "ought to be content"
Well, maybe they "ought to", but would they in practice? Unlike the typical employee, executives would generally have enough "fuck you money" to ride out the difficult period from the comfort of their vacation homes. And I'd say most of them would have done enough networking and schmoozing to not worry too much about their next role.
> "It's not as if there's a shortage of employees or execs to go around right now" I don't think that there not being a shortage of execs would help the company significantly, since the company wouldn't have much to offer to attract experienced people, and in any case doesn't have the time to wait for the new people to ramp up.
Re: On eve of bankruptcy, US firms shower executives with bonuses
#265There 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.
It isn't part of the natural universe, but neither is bankruptcy law, so why care overly about it when thinking whether or not to change things?
What is economically viable does depend a bit on physical law, but it also depends a great deal by the legal ecology we humans decide upon collectively.
Re: On eve of bankruptcy, US firms shower executives with bonuses
#266Earlier quoted context omitted.
> 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).
I don’t see how it’s obtuse. The morality of paying an executive disproportionately more is the same morality as paying a worker in the US disproportionately more than a worker in a poorer country.
At the end of the day, everyone is looking out for themselves and their immediate tribes first, and everyone takes what they can get. However, society is more harmonious when the delta is not too great. The US simply also had the luxury of having a delta of two oceans and huge amounts of space.
Re: On eve of bankruptcy, US firms shower executives with bonuses
#267Earlier quoted context omitted.
Is that before or after you learn that the typical severance for the people in question was less than a week's pay? So when it was "your turn", you're going to get tossed in the street with NOTHING to tide you over to your next gig. Still feel like letting your family starve for the sake of "loyalty"?
Which people? I don’t have or want a family. And it’s not about loyalty to the company it’s about the other people working under me. I have savings so I can afford to be unemployed, but still don’t understand your hypothetical.
(No offense, but this is about as non-hypothetical as it can get. This was my reality in the recent past)
Re: On eve of bankruptcy, US firms shower executives with bonuses
#268There 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…
You pedantic rant aside, you didn't actually explain your point. How does paying large bonuses to executives protect the interest of creditors? I'm no expert but this sounds like how a person declaring bankruptcy might max out their credit cards at the apple store then sell them off for cash on Craigslist. I.e. Draining the bank so it doesn't go to creditors.
This same pool of money used for gratuitous bonuses could also be paying worker severance, so you justifying it as otherwise moral is exactly the GP's point.
Re: On eve of bankruptcy, US firms shower executives with bonuses
#269Earlier quoted context omitted.
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…
You pedantic rant aside, you didn't actually explain your point. How does paying large bonuses to executives protect the interest of creditors? I'm no expert but this sounds like how a person declaring bankruptcy might max out their credit cards at the apple store then sell them off for cash on Craigslist. I.e. Draining the bank so it doesn't go to creditors. This same pool of money used for gratuitous bonuses could…
I'm not sure jonahbenton is trying to justify it as moral, but rather trying to identify who exactly I mean by the hand-wavy "ruling class." Their point is well taken.
Re: On eve of bankruptcy, US firms shower executives with bonuses
#270Is 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.
> The public has no say.
In the US yes, but it doesn't _have_ to be like that.