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> To offset this, the shareholders may make it known that a generous severance package, as well as generous benefits if the company does exceptionally well, are
by Maarten88 10y ago
> To offset this, the shareholders may make it known that a generous severance package, as well as generous benefits if the company does exceptionally well, are on the table, to simultaneously soften the blow if he takes a bad risk, and sweeten the deal if he takes a good risk.
This concept strikes me as grossly unfair towards the employees. Like the CEO, they are also not diversified. Their risks may be even bigger than that of the CEO: if the strategy fails, they may loose their job/income, and they make less to begin with. How are they rewarded for pursuing the more risky strategy?
- robryan 10y agoThey will likely also have some level of stock based compensation. On the downside most tech employees can easily find a job elsewhere, whereas the CEO may take a reputation hit that makes it hard to get another position at a similar level. So it probably comes down to the regular employee not valuing downside protection enough to give up some base compensation or upside reward.