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On eve of bankruptcy, US firms shower executives with bonuses

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

#161
post #130

Earlier quoted context omitted.

I'm keenly aware of the disparity. However... - If we do not keep the highly paid senior sales rep, we're going to have no customers and thus... everyone gets canned. - They are objectively better off leaving for another firm, where they don't need to worry about impending doom. So we need to provide an appropriate incentive to prevent them from breaking ranks and screwing everyone else left behind. - The humble fact…

I guess the real answer here is I'm not cut out to be an exec and I don't understand the mindset of people who are because I'm fine getting payed $100k a year (modulo inflation) for the rest of my life and I've lived most of my career at $30k, and I would never fire anyone to increase my own salary. I would sooner go broke at a company I ran than hang people out to dry who depended on me for a livelihood.

> and I would never fire anyone to increase my own salary

How about this instead? Your company is overstaffed due to a massive drop in sales. You will run out of money and will have to fire everyone including yourself in one month. Your other choice is to cut 80% of the staff immediately and your business will make enough to pay everyone’s salary who remains.

The better choice for everyone is the surviving business, and that’s the one that puts more money in your pocket. Letting people go is a business decision and it’s very often the correct one. Good business decisions lead to making more money.

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

#162
post #153

Earlier quoted context omitted.

My point is frequently your world descends into a flaming pile of shit unannounced. Go ask the career restaurant workers how the year is going. Go ask the tourism guides and travel agents. Go ask their bosses how they intend to keep the doors open with an 80% decline in revenue. Short answer: you can't.

I don’t understand what your point is. You think I don’t get this? This is a thread about giving executives bonuses when the company is going bankrupt.

No, it’s a thread about rewarding executives for managing to keep any semblance of a company alive. A company that comes out of bankruptcy is much more valuable than one that doesn’t. The shareholders have to compensate the execs enough to entice them to go through that rather than leave for greener pastures where their shares won’t be worthless and they won’t have to fire people.

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

#163
post #160

Earlier quoted context omitted.

Ah of course. Supply and demand must just be some tyrannical social construct, imposed upon us by an invisible oppressor. All it is is the price agreed upon by a party who wants to sell something, and another party who wants to buy it. The incentive of each party in the transaction is very obvious, and supply and demand is simply what occurs when people are allowed to choose how much they want to sell something for,…

Ah, either perfect capitalsim, or centally planned economies, nothing in between and no shades of grey, exactly as promised in econ 101. Oh boy... Well, at least you know how to attack straw men as well!

I really have no idea what point you’re trying to make. Supply and demand and the primary market forces in every conceivable system of economics.

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

#164

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…

> Some people have EXPONENTIALLY more impact on saving a business than everyone else in the building. This is true in every organization. The canonical example is Steve Jobs.

So it's not NeXT engineers is it?

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

#165
post #93

Earlier quoted context omitted.

[0] https://finance.yahoo.com/quote/HTZ/holders?p=HTZ

Not really sure what your point is.

Hertz insiders control less than 1% of voting shares. You will see similar numbers amongst most of the other older companies doling out executive bonuses.

They did not have any power to grant themselves the bonuses. Keep in mind their overall compensation with the retention bonuses might still be significantly lower than their expected compensation pre-bankruptcy, due to the stock portion of their comp being near worthless now.

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

#166

Earlier quoted context omitted.

Not really sure what your point is.

Hertz insiders control less than 1% of voting shares. You will see similar numbers amongst most of the other older companies doling out executive bonuses. They did not have any power to grant themselves the bonuses. Keep in mind their overall compensation with the retention bonuses might still be significantly lower than their expected compensation pre-bankruptcy, due to the stock portion of their comp being near wor…

Every member of Hertz board has been in a Cxx position with most of them having been CEOs [0]. Some of them may want to be CEOs again someday so it's in their best interest to keep executive compensation high.

[0] http://ir.hertz.com/board-of-directors

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

#167
post #160

Earlier quoted context omitted.

Ah, either perfect capitalsim, or centally planned economies, nothing in between and no shades of grey, exactly as promised in econ 101. Oh boy... Well, at least you know how to attack straw men as well!

I really have no idea what point you’re trying to make. Supply and demand and the primary market forces in every conceivable system of economics.

And at no point was that what was addressed by me. Your utter simplification of the labour market to a perfect version of it is.

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

#168
post #35
post #33

Earlier quoted context omitted.

It can be both bad and encouraged by incentives. Doesn't make it not-bad though.

Not in this case. That is the oversimplified emotional response you see in the comments, but it doesn't jive with reality. Let's say you are the COO of Hertz, making 300K salary and 1M in options. The shareholders vote for Chapter 11 and those options are now effectively worthless, so your income decreased by ~70%. Are you going to stick around and try to dig out the company without a retention bonus? Given that the…

> Let's say you are the COO of Hertz, making 300K salary and 1M in options

I worked directly with one of these C people at Hertz in a previous job; even 300k is grossly overpaying. Good luck finding another castle of cards arrangement to get a C position anywhere.

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

#169
post #49

Earlier quoted context omitted.

When executive leadership has utterly failed, it’s probably better to replace them. The fact that their “1M” in options is worthless is a net positive as it lets the company drop dead weight and save money. Handing out bonuses for retention is simply looting the company rather than being part of any efficient long term strategy.

So hertz, which was leveraged with a decision maybe (maybe!)outside and preceding the CEOs tenure, in a low margin industry, should shoot the (maybe good, maybe bad) CEO just because? Would you join a company in a 363 process without even knowing who the new owner would be, or if you could compete on emergence, or if you could emerge in a commercially viable way? Where are these amazing industry turning executives th…

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.

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

#170
post #46

> Hertz - which recently terminated more than 14,000 workers - paid senior executives bonuses of $1.5 million days before its May 22 bankruptcy, in part to recognize the uncertainty they faced from the pandemic’s impact on travel, the company said in a filing. Compensate the C-suite for confronting uncertainty, but fire the workers. This seems like another variant of "brutal capitalism for the poor, socialism for the…

It has nothing to do with capitalism or socialism, it's a corrupt compensation scheme for C level executives. Corrupted schemes exist in any political system.
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