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Comment by gojomo | Hacker News Reader

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.)

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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.)

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.

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