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Comment by JoeCortopassi | Hacker News Reader

Of course they do.

How else do you get people to stick around on a sinking ship? You and I wouldn't stay out of some sense of altruism, why would they? Heck, tech companies have to vest stock options over 4 years because most people would take the money and run.

What does everyone think happens when everybody quits because there's no reason to work there? The money is just returned to investors? Even if that's all you did, you still need people who...

    - know where the money is
    - how to distribute it
    - how to stay compliant with the law
    - how to make sure oversight is in place so that people don't straight up embezzle
    - keep outside players away that would try and take equity

Why on earth would someone stick around for such a sucky job, if the reward for doing well is getting laid off because the company tanked. Of course you need to pay people to stick around

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Those tasks are handled by people that report into the CxO’s.

The executives set broader directions and hire people to keep the lights on.

Use the money that would have been executive bonuses for retention packages that make sure the lights stay on.

Honestly, even a juicy bonus isn’t going to keep many executives at a sinking ship unless they’re not able to find another job.

> for retention packages that make sure the lights stay on.

even you admit that people doing any work in a bankrupting company needs a retention package to continue working - why should the CEO (just another worker in a company) be any different? Why is their retention package somehow less important than the retention package that you proposed for the "keep the lights on" workers?

That's not a "retention package". That just paying regular people a normal salary in the mundane work of winding down a company.

I understand that that's what's necessary to keep executives around. What's less clear is whether this why everyone else, especially the shareholders, want the executives to stick around.

If I offer you a deal on a dice roll where if it lands on 1 through 5 you get $1000 but if it lands on 6 you get nothing, and to play you only need to put in $10, that's a fantastic deal for you and the profit maximising move is to play. If the die lands on 6, that doesn't stop it having been the right move on your part to have played.

Companies going bankrupt in extraordinary market circumstances doesn't mean they were mismanaged. Only that their 6 has come up.

In principle I agree, in practice I'm less sure.

I agree that "well, you drew the short straw in getting a pandemic" is a fair reason to explain an executive's failure socially, but I've never known investors to be this kind and charitable. In my experience investors want to extract value right now, and they're more than happy to chuck executives away if they think someone else could do better no matter what the underlying cause was.

Secondly, while this behavior is galling in the current context, it's hardly new. The 2005 law banning executive bonuses during bankruptcy wouldn't be put in place if it wasn't already a problem. Under the general case you laid out above, investors appear happy to hand out bonuses for executives that crashed the company after rolling a 3.

If we're just talking about liquidating a company and distributing its assets to creditors, that's a pretty normal, mundane, boring job that's handled capably by your garden-variety team of lawyers and accountants, who will work for normal salaries in their fields to do that job. Overpaid executives and retention bonuses are not required in the least.

That's not really true. Companies need to shut down in annorfanized fashion, even under chapter 7.

Under chapter 11 though you need as few personnel changes a possible if you want to turn things around. Domain knowledge and understanding on internal company processes is key.

> How else do you get people to stick around on a sinking ship?

You could get a lot of people signing up to do those jobs at the exec's old salaries, even people from inside the company that already know the business well.

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