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Comment by dangrossman | Hacker News Reader

> Employment At-Will. Please understand that this letter does not constitute a contract of employment for any specific period of time, but will create an employment at-will relationship that may be terminated at any time by you or Yahoo!, with or without cause and with or without advance notice.

Just like being a cashier at McDonalds. That bit was unexpected for me. Why would the board want to let its CEO quit without notice at any time?

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This is standard for pretty much any company. It protects the company against frivolous wrongful termination lawsuits.

Why? Because the alternative would be even worse. If a CEO desperately wants out with no notice/transition, you would not want to obligate them to stay an extra day as a contractual prisoner.

(In practice, still, most exits would still have some notice. But it'd be mediated by mutual reputational concerns, not contract terms.)

You would definitely want them to stay until you had a replacement lined up, even if they were unhappy.

Not really. Organisation can function a long time without CEO. People at the very top are completely irrelevant to day to day operations.

Shareholders don't often see it that way.

I'd be curious about this. I can't believe it's true. Besides that, it's very easy to very quickly appoint an interim CEO from within. Look how quickly Scott Thompson was replaced by Ross Levinsohn.

When the CEOs of RIM stepped down last year, their share rice fell 9.1% on the announcement. When Best Buy's CEO resigned in April, their share price dropped 5.87% that day. When Akamai CEO Paul Sagan announced his intent to step down two months ago, shares fell 6% in after-hours trading. It's pretty much guaranteed that a sudden change in leadership will lead to selloffs. Why can't you believe it?

Your comment

"Shareholders don't often see it that way."

was in response to the statement

"Organisation can function a long time without CEO. People at the very top are completely irrelevant to day to day operations."

I honestly get the impression that those shareholders were selling off, not because they thought the company couldn't function temporarily without a CEO, nor because they thought a CEO was necessary for day-to-day operations, but because they saw the CEO stepping down as yet another real sign that the company in question was dying.

I thought we were talking purely about whether shareholders think that "Organisation can function a long time without CEO. People at the very top are completely irrelevant to day to day operations.", and I don't think shareholders selling on the day of the news is a good indicator for saying they do or don't.

(edited for clarity)

I'd say most of them were selling their shares because of they anticipated that the share price will fall as information about CEO stepping down propagates to other shareholders and the other shareholders use the same logic.

The thing they fear is fear itself.

So you don't believe that markets function primarily as an information exchange? This is a driving factor in my worldview. You're assuming that all of these investors are primarily concerned with exceedingly short-term gains if you believe this is how they operate. While that's true of day traders, by definition, I don't believe it's true more generally.

I believe it's related to the fact that uncertainty has an actual cost, and the fact that companies without CEOs (or with hastily appointed interim CEOs that were not a strategic plan) tend to not be as focused on the 2-5 year strategy as they should be. I believe it's also related to the fact that a new CEO will typically pursue a different strategy, and that consequently a solid 2 years will be eaten up (generally) in ramp-up to pursue the new goals.

Anyway, just rambling. It's late. HN is great for this.

You don't have to obligate them, if the CEO has a notice period but wants to leave early and the company is happy with that, they can always waive the notice period.

I'm so glad I live in the EU, where you generally don't see clauses like this (except within probationary periods).

In the Netherlands at my last job, because I didn't hand in my resignation 'before the end of the month' (Dutch law) - I handed it in on the 1st of the next month - they tried to make me work an extra month's notice (so effectively 2 months instead of 1). They were resolute about this, despite me leaving because I was very unhappy working at the company.

New York is a "at-will" employment state. Unless otherwise specified, both parties can do as they wish (give a 1 day notice, for example. Though that would look very bad for future employers...) http://en.wikipedia.org/wiki/At-will_employment

note that you can't actually make them work, no matter what the contract says (see https://en.wikipedia.org/wiki/Specific_performance). (you can sue them for compensation though.)

California is an at-will employment state. In California, you can quit or be fired at any time.

There's no such thing as an "at-will employment state". No state prohibits employment contracts with length of employment or notice of termination terms. Rather than repeat it, refer to my other comments in the thread.

Same in Washington.

At-will employment is the law in California and several other states meaning either side can end the relationship for any reason other than discrimination against a protected class. So it's not Yahoo's choice, their just stating the law.

You're misinformed. At-will employment is not a law, it's a legal doctrine, a description of a legal status: the absence of an employment term restricting the right to end the employment relationship at any time. At-will employment is the default state of employment relationships in every state; they are not stating anything unique to California. In fact, California was the first state to rule a termination in an at-will relationship illegal when it was in violation of public policy.

What was surprising was not that they made the at-will relationship explicit, it's that they chose to have it that way at all. There is nothing stopping them from requiring notice before she quits, or her from requiring they hire her for at least some minimum term. You hear about having to buy-out contracts of executives all the time.

Montana is generally not considered an At-Will state (after the probationary period). Unless it has changed recently.

This leaves them more options, and they incentivize the CEO to stay through stock grant vesting.

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