31–40 of 306 posts
I have trouble seeing how this is Something That Needs Fixing(tm). It's a shareholder problem because it's shareholder capital being spent on these bonuses. Both pre- and post-bankruptcy, shareholders are in the primary position to fix it.
I think there is none such tools for shareholders to curb such misconduct
I have trouble seeing how this is Something That Needs Fixing(tm). It's a shareholder problem because it's shareholder capital being spent on these bonuses. Both pre- and post-bankruptcy, shareholders are in the primary position to fix it.
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…
I have trouble seeing how this is Something That Needs Fixing(tm). It's a shareholder problem because it's shareholder capital being spent on these bonuses. Both pre- and post-bankruptcy, shareholders are in the primary position to fix it.
If there’s anyone to object it would presumably be the primary debt holders.
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…
It can be both bad and encouraged by incentives. Doesn't make it not-bad though.
Given that the shareholders are doing Chapter 11 and trying to turn the company around, there is nothing wrong with them voting for retention bonuses to try to keep the company rolling. The problem is that the system enables shareholders to do Chapter 11 without the debtors having a say in it, when the problem is typically debt.
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…
So they quit, and the company goes bankrupt on a different timeline. Why should either society or shareholders accept new bonus declarations?
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…
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…
"Nobody wants to try to turn around a bankrupt company at their old salary (with their old RSU's and options now worthless)." So they quit, and the company goes bankrupt on a different timeline. Why should either society or shareholders accept new bonus declarations?
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…
It's hard to prove a counterfactual, but it's only worth it if said person is the only person who could achieve those results.