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I think you need to read both woopwoop and amluto's comments again. woopwoop is saying that the equity compensation given to CEOs is a disincentive for taking

I think you need to read both woopwoop and amluto's comments again. woopwoop is saying that the equity compensation given to CEOs is a disincentive for taking risks and that it needs to be offset by a promised severance package in order to increase the variance of outcomes. amluto is saying that this is a mischaracterization of the equity compensation for CEOs, which only exposes them to gains and not losses and thus they are already incentivized to pursue a risky strategy (e.g. golden parachutes are not required to create this incentive).

hammock 10y ago
woopwoop is saying that CEO compensation is structured to benefit the risk-taking CEO no matter how well his risks pay off ("generous severage package" if they don't pay off, "generous benefits" if they do). amluto is saying CEOs are exposed only to gains and not losses, which is agreeing with woopwoop without realizing it. The reason a BoD/shareholders would want to set up a CEO with such an arrangement is because the much wealthier shareholders are well-diversified and risk-seeking (they don't depend on their income from this one company to feed their family)- while the CEO is not as diversified, he DOES depend on his compensation from this one company to feed his family- so if the BoD/shareholders expect him to take risks, then he needs to be protected from the consequences of those risks.