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Comment by archildress | Hacker News Reader

You're not wrong, but if you are a top Senior Level exec being recruited and only one company threatened you with compensation clawback, would you be more or less likely to take that job over others?

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If a regular employee said they'd only work if the possibility of "firing for cause" was taken off the table, would you think they were qualified?

I imagine it's a little difficult to compare the two because there is a difference in bargaining power between a regular employee (who is closer to a commodity) and a CEO candidate (for which the applicant pool is much smaller, and company fit very important).

Secondly, a CEO, being the head of the company, could technically be held 'accountable' for hundreds of millions of dollars, and it'd be reasonable for someone to want to shield themselves from such a liability, which might not necessarily arise out of a violation of their own, but rather of the company.

Maybe if we started hiring "regular" people for CEO, companies could spend the excess compensation on other employees so we can keep the good ones around and stop the nickel & diming that leads to a man getting beaten for riding is his paid-for airplane seat.

United's CEO was paid $19m last year (per Morningstar). United has 86000 employees. That works out to $220 per employee over the course of the year, or about $10 per paycheck (gross).

If you dumped all the executives, the raise amounts to $30/paycheck. Do you think $600/year is the difference between good employees and those that let men get beaten?

Morningstar's free summary doesn't break down cash vs. equity. The latter is mainly being paid by shareholders and wouldn't represent cash that was available to distribute to employees. Therefore it is highly likely that the "windfall" of a regular Joe CEO would be much less than I have noted here.

You could hire a few teams of incredibly skilled people for that though.

At that point normal teams will balance out the results of incredibly skilled teams.

But won't balance out the CEO?

Isn't there a large org chart of not-quite $19MM earners to account for, too? It's not like everybody makes $200K until being made CEO.

At the low end of wages I think 600 a year would alleviate enough stress to show an improvement in employee behavior. People don't usually wake up thinking they'll half ass their job or make a poor decision that day, but when you are dealing with the stress of paying rent or putting food on the table it just pushes you that much closer to cracking

In government, C-level people make less than $200k, usually a lot less, yet seem to be able to competently lead organizations consisting of tens of thousands of people. One commissioner of a multi-billion dollar agency that I knew drove a late 90s Accord a few years ago.

They are also subject to invasive and strict ethics and disclosure rules revolving door policies.

CEOs mint money because of social connections, not value to the business. The board members who implicitly endorse graft should themselves be subject to criminal sanction.

> CEOs mint money because of social connections, not value to the business.

Sure, the CEOs are themselves often on the boards of other corporations. The incestuous nature of this top level is bordering on the absurd.

"competently"

It's not about bargaining power, it's about even considering them for the job. Wouldn't you think they were telling you they're probably going to turn out to be more trouble than they're worth? I'm pretty sure that's what conventional wisdom says is the correct response.

...but I'd be 20x more keen to take a job at a company who doesn't fire on suspicion. E.g. a company who stands their ground and says: "We know we're subject of a PR campaign against us, but we respect the presumption of innocence: We won't fire X because he hasn't yet been proven guilty in court, and we will fire any that is proven guilty." i.e. GitHub, Mozilla both have fired CEOs on unproven claims.

A CEO's job is to champion the interests of their company. If they're mired in controversy, legitimate or otherwise, their ability to do that job is compromised. Sometimes, it's the right move for the company to stand by an unpopular CEO. Other times, it's better to walk away.

Customers and investors are fickle, and often irrational. Supporting a CEO that is driving both away because "presumption of innocence" might be the worst possible move you could make, depending on the situation. In fact, I'd argue that a hallmark characteristic of a good CEO is someone who can say, "My continued presence is hurting the company. I need to step down, so everyone else can succeed" if that's what's needed.

Yes, even if the controversy is completely made-up bullshit.

In the long run, the company and the (former) CEO will both be better off if they can look back at a gracefully handled departure, where everything turned out to be so much noise, than some Pyrrhic victory, where you've alienated customers, investors have walked, but, by god! you stood by your CEO!

In this case, the guy was party to a felony and was paid nearly $30M to go away.

What about proving the felony in court and make him pay for hurting shareholder value?

The upside of following courts and presumption of innocence is, you can tell your next CEO, "This won't happen to you because you'll respect the law, and what's more, if you respect the law we'll even respect the presumption of innocence and keep you in your job much longer than at Mozilla's and GitHub's. And you'll be clean of controversy when you leave, so it will be much easier for you to jump on an even bigger CEO position."

Actually, I could see that drawing some people just as it repels others. IT signals that the company is serious about acting responsibly, and putting incentives in place so its management does so. Some people may want to work at a place where they don't have to worry about being pressured into something they thought was wrong, and a signal like this may attract them.

Sure, you can see that. But in the real world, outside of a thought experiment, nobody would.

> Sure, you can see that. But in the real world, outside of a thought experiment, nobody would.

You should contact some behavioral economists and offer your services. I'm sure they could use someone that knows exactly how people are going respond to complex behavioral questions with multiple competing incentives. They could save a bundle on the speccing and running of experiments.

It depends what kind of candidate the exec is. Personally I don't enjoy working for places that are known for not firing low performers. I'd rather work somewhere that has higher stakes and higher rewards.

That kind of mentality is more likely to attract execs looking for a cushy high paying job with little to risk.

It's not only firing, it's also taking back money already paid. Imagine the company had particularly good year, you get $LOTS_OF_MONEY, you spend it on $LUXURIES, and then next year something goes wrong, and the board decides it's your fault, and suddenly you owe $LOTS_OF_MONEY back. And you've already spent it, or invested it in some illiquid asset. Maybe very uncomfortable situation, much worse than plain firing. People aren't used to take that level of risk, so many may be reluctant, especially if other options are around.

I was imaging something like unvested equity. Yes that's a lot more aggressive. Contracts often require employees to pay some of the back signing bonuses and relocation fees if they leave within a year. I've heard rumors that it's not commonly enforced but contractually it's a possibility. But in theory there is precedent of that for employees where paying back a 100k signing bonuses and relocation expenses is a big risk and you still senior software engineers relocating to the bay area under those terms.

We're talking about severance pay that they were paid in the course of being fired. It's not clear to me that it should have been paid in the first place.

Well, if that's just severance that may be simpler case. But in general clawback clauses may extend years behind. OTOH, Wikipedia says[1]:

The prevalence of clawback provisions among Fortune 100 companies increased from lower than 3% prior to 2005 to 82% in 2010.

If everybody (or nearly everybody) starts doing so, then the competitive disadvantage of having such clauses is reduced, since it may still be better to have risky CEO job in F100 company than not having one.

[1] https://en.wikipedia.org/wiki/Clawback

More: It shows the company cares about integrity and that's the kind of place I'd like to work.

But I'm not a senior executive.

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