
Sears to pay $25.3M in bonuses to top execs after filing for bankruptcy - spking
https://thehill.com/policy/finance/421565-sears-gets-approval-to-pay-253-million-in-bonuses-to-top-execs-after-filing
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i_am_proteus
>The company’s proposal will reportedly offer bonuses to 19 executives
amounting to up to $8.4 million over the next six months if the company is
successful in hitting certain financial goals. The employees would also be
eligible for more money in bonuses if the retailer is in a position to hit
those financial targets when sold, an attorney for the company reportedly said
at the hearing.

It appears that the bonuses are contingent on the company hitting financial
goals. This is a normal practice of a company in bankruptcy trying to retain
talent during a wind-down or rebuild.

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Upvoter33
I love the line "This is a normal practice". Perhaps what is being called into
question here is the acceptance of these normal practices...?

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jjeaff
If this company owes you money, would you prefer that the core executive team
stays around and brings in an extra $200m in revenue during the wind down even
though you'll have to pay them $20m to stay? Or just fire everyone, and make
nothing?

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michaelt
I'd prefer that executive compensation above a certain threshold was held in
trust for 5 years, and clawed back under certain circumstances.

That way the core executive team would be motivated to bring in the extra $200
million _without_ requiring huge bonus payouts for failure.

~~~
eecc
I think your statement is the sanest I've read in years within the context of
similar discussions about corporate.

It's a bit shocking that most other answers seem to accept and justify this
status-quo without a flinch.

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rayiner
These implication from these articles is so stupid. This is a restructuring,
which means that the company is supposed to emerge from bankruptcy as a viable
company. Part of the process before filing should be getting rid of the people
who got the company into trouble in the first place. But you need a good team
in charge through the bankruptcy and on the other side. The idea that a debtor
in possession should face some sort of executive compensation austerity simply
means that all the people with options will jump ship.

~~~
lovich
Why has our society organized itself so that company executives win whether or
not they do a good job? One of the premises of giving executives high pay is
that they are getting it for succeeding at running the business well, but as
we see time and time again they still get paid out even when they fail.

How is it this efficient or moral? We've got the worst of both worlds here and
it's because the people getting the benefits are the ones making the rules.

~~~
aantix
Because they take on the risk and burden of carrying a company with 1,000’s of
employees and a similar number of shareholders. It’s incredibly stressful
whether successful or not.

It’s not like 5pm rolls around and these people get to roll home and forget
about things.

You’re an absolute outlier if you even want one of these positions.

(And no, I am not one of these people, I like seeing my kids in the evenings).

~~~
brianpgordon
Is shouldering the burden of running the company really 312 times as stressful
as the average worker's job though?

[https://www.theguardian.com/business/2018/aug/16/ceo-
versus-...](https://www.theguardian.com/business/2018/aug/16/ceo-versus-
worker-wage-american-companies-pay-gap-study-2018)

~~~
aantix
Stress is part of the comp.

What is needed in a restructuring - access to the right people with capital,
long hours to get the deals done, offloading of dead inventory, answering to
shareholders, nervous employees, continue making payroll.

It's an outlier job. There's not an average employee that has that pedigree
and access to take over the job.

Nor would the average employee ever want the hours nor are they productive
enough.

~~~
lovich
> There's not an average employee that has that pedigree and access to take
> over the job.

Either this is a tautology or citation needed here. So far the argument for
this has been that they bring in the big bucks so of course they deserve high
compensation. The empirical evidence so far is that they have the title so
they get high compensation, and their performance has little to no affect on
that compensation.

Risk is normally commensurate with reward, thus if we are observing that there
is little to no difference in reward, there must be no little to no risk.

I would need to see concrete proof that an exec was worth this high pay
beyond, "well what if they weren't there, maybe it would be worse!?!?" Before
I believed the argument again

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spamizbad
Once you hit C-level at a big company are you basically the free markets
version of the mafia’s “made man”?

~~~
mac01021
But why?

~~~
Spooky23
Jobs at that level are about who you know, not what you know.

Think of it as a club of like 30,000 people in the US. 3,000 of those people
are geniuses, 3,000 are idiots and trust fund kids. The rest are in the
middle.

You don’t want to be the director who screwed over some good old boy.

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tjr225
The usual reasoning I see on HN wrt sympathy for these execs is something
along the lines of "they are worth more, so they get paid more."

The argument seems to fall apart when they are they very same people who ran
the company into the ground. Tax the rich and help the poor- odds are they
just got unlucky in a game that makes almost no sense.

~~~
SubiculumCode
Although, sometimes a company will fail no matter how well it is managed.
Chess analogy, if you lost your queen and rooks, even having the best chess
computer take over your losing game might have a hard time avoiding a loss.

~~~
paulddraper
Is that the same computer that lost your queen and rooks, or a different one?

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InclinedPlane
This is all about class distinctions. At a certain level they become
indistinguishable from aristocracy.

The entire premise for paying execs high salaries is that they have demanding
jobs that few people have the skills to do and the work entails risks which
ordinary workers do not take. And this justifies exorbitant pay and lavish
bonuses. But the reality is that most of these people have no special talents,
and even when they run a company into the ground and hurt people (such as
those workers who end up, often, with missing pay, fucked up pensions, and no
jobs, etc.) and the businesses they are supposed to be stewarding, they still
end up being awarded bonuses.

~~~
shados
Not just skills, but connections as well as the willingness to essentially
leave their normal life behind. Honestly, the skills are the easy part, which
is why a lot of people see what they do and think "Welp, I could do this
too!".

~~~
lovich
I think you'll find most people would take on this level of stress and change
in lifestyle for 5 years to garuntee that they would never have to work again.
Additionally it's not like the executive leadership doesn't push stress onto
their employees. You've never had or seen a boss pulling in 7 figures emailing
their employees earning a fraction of that after midnight and being upset at
the lack of response?

The executives get this pay because they can. Any argument about it being
moral or ethical falls apart when you look at reality

~~~
shados
> You've never had or seen a boss pulling in 7 figures emailing their
> employees earning a fraction of that after midnight and being upset at the
> lack of response?

Absolutely. Though my experience is that the exec is in the office too when
that happens...and on a 5000, 10000 or more employee company, if the employee
is being called on to do that every now and then...multipled by the amount of
employees being called to do that every now and then...generally said exec is
basically never sleeping (probably why they're so grumpy).

And yeah, a lot of people would take the role in a heartbeat when offered....
and cry themselves to death in the bathrooms at every opportunities until they
either jump off a bridge or quit.

With that being said, a ton of people would do just fine in any of the
categories I listed (skill, connection, willingness). What's rare isn't people
with one of those things. It's people with all of those things. Having been
part of the loop to hire execs, it's really hard. I've seen a lot of people
being promoted to those roles who didn't really want it from lack of
candidates.

And then there's things like board members, who usually get the spot simply
because they invested in the company: you own it, you get to run it into the
ground if you want to (within legal limits, of course. But that's why they get
the spot over someone else).

Finally...discrimination aside (and that is certainly a problem when it comes
to high positions, and it definitely needs to be fixed), being lucky isn't
immoral, IMO.

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purplezooey
The usual. Employees get thanks, execs get banks. When will we stop tolerating
it. And BTW, the wealthy do not need your help defending them.

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SubiculumCode
To my mind, the issue here is not that a bankrupt company payed bonuses to
executives who managed the bankruptcy process well. To my mind, the issue is
that executives are paid so exorbitantly well relative to non-executive
employees, and this issue is not specific to Sears or other trouble companies.

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artursapek
Why is this surprising, or a news story? "Sears" is not some sentient being
that decided to do this independent of the execs. "Sears" is literally the
execs.

~~~
Spooky23
Sears is a public company. You probably own some fraction of it.

~~~
brianpgordon
It hasn't been in the S&P 500 since 2012. In fact it's had Q appended to the
ticker and been moved to the OTC market. I doubt he owns some fraction of it.

