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Comment by mhb | Hacker News Reader

How do these golden parachutes (including the Wikimedia ones) make any sense in terms of incentives? Why would you want people to get a bonus for leaving? Fine, there's a negotiation with the high level employees and they ask for these things, but why not just give them more of something else instead? Like the usual things that reward tenure.

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The real incentive is "we all sit on each others' boards".

Because if you want someone with skill to enter and run (or recover) your company, he won't do it for the sake of an adventure. He usually gets offered a big reward for achieving a goal he cannot fully judge yet, and a small compensation in case he fails (and ultimately leaves).

If such a person chooses the "golden parachute", the "golden rocket" he had to commit on hiring was maybe unachievable in first place...

The pieces of compensation can all be negotiated. The board could make an offer that trades an element with a sensible incentive for staying (or even just more cash) for an element that is an incentive for leaving.

This cuts both ways. Are there /really/ so few 'someone with skill' people that can run your company, often into the ground? Or it's more of an incestuous network of very connected people that sign fat checks to each other, because shareholders are divided and remote, so nobody is paying close attention anyways?

The second one.

Surely alot of the latter. But it's not a matter of being few, it's also a matter of who has the support of the board / shareholders / owners to actually steer the company.

Even if you're the best for the job, if you don't have the backing of the board you won't get anything drastic done.

Whether those who have the support of the board are really the best ones for the job, that's another question...

From my experience the additional aspect is also that shareholders and/or the management board often have unrealistic expectations on what the company is capable of, and are unhappy when facing reality.

So such a parachute can also be useful to force the company to work through tough decisions, because firing the person who insists on them will not be cheap either.

You won't get a CEO to lay off 2800 people without offering them a golden parachute. Parachutes comes with strings attached.

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