
US companies grant execs big bonuses before declaring bankruptcy - vijayr02
https://on.ft.com/3gc4oqV
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GreeniFi
“ Companies across America are awarding top executives multimillion-dollar
“retention” bonuses shortly before declaring bankruptcy”.

Shouldn’t this read: “Companies’ top executives are awarding themselves
million dollar bonuses before declaring bankruptcy”.

The moral hazard here is insane.

Secondly, I do find it interesting how rotten execs can hide behind a
corporate brand. Corporate scandals are often household names, not so the
individuals who were the true instigators of the scandal.

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aeternum
Stuff like this always gets tons of press but exec bonuses during a bankruptcy
often are logical.

Many execs will see bankruptcy coming and will jump ship. Bankruptcy can be
complicated to navigate and there is often still significant value in the
company. It really helps to have at least a few people that understand the
business and the books.

A significant proportion of typical exec comp is equity/options which is/has
likely gone to zero, so a cash bonus is often used as a retainer fee for key
execs.

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GreeniFi
As a response to my original post, I believe you are (the more) correct to the
extent execs need to receive a risk premium for helping save the business. I
query whether the execs who (likely not always) oversaw the transition to
bankruptcy are the ones to salvage value - but their institutional knowledge
is also surely needed and you need to keep a few around.

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vannevar
This should be regarded as a breach of fiduciary duty, a kind of legalized
embezzlement. Shouldn't shareholders or creditors have standing to claw those
bonuses back in bankruptcy?

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sombremesa
> Shouldn't shareholders or creditors have standing to claw those bonuses back

We'll find out at the end of the McD's lawsuit.
[https://www.nytimes.com/2020/08/10/business/mcdonalds-ceo-
st...](https://www.nytimes.com/2020/08/10/business/mcdonalds-ceo-steve-
easterbrook.html)

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vijayr02
Non paywall link: [http://archive.is/VanKI](http://archive.is/VanKI)

~~~
thetanil
thank you

