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As a novice programmer, I once declined a position that had a contract that stated I would be responsible for all monetary harm if I were to leak information ab

As a novice programmer, I once declined a position that had a contract that stated I would be responsible for all monetary harm if I were to leak information about the project. As I was being paid peanuts, and the project was worth millions, I knew I couldn't take any chances with that. I looked into insurance, but it would have cost over half the pay that was already peanuts. The problem wasn't that I was worried I'd slip up, or that I'd do something unethical. My worry was that the company would do something unethical and blame it on me somehow. If I were applying for a CEO position and saw a clause like this, I'd refuse to sign that contract, too. So United isn't wrong... There are definitely people who would refuse to work for them if they put that clause in the contract.

mistermann 9y ago
Hearing it this way makes complete sense.
- kbenson 9y ago
  Except that as a CEO, presumably they could afford insurance. Then again, insurance might correctly price itself based on how likely a CEO is to screw up, which I imagine is actually fairly common, and the insurance might be too expensive for even CEOs.
draw_down 9y ago
An incoming CEO would have slightly more leverage with the company than you had in that situation. :)
Retric 9y ago
The claw back is limited to their actual pay. Which also makes insurance far more affordable.
xoa 9y ago
>that stated I would be responsible for all monetary harm if I were to leak information about the project >If I were applying for a CEO position and saw a clause like this, I'd refuse to sign that contract, too. So United isn't wrong... I might be reading it incorrectly, but I think there is a very big difference between capped and uncapped liability/penalty clauses. What you seem to be describing facing sounds like the latter, and yes that should give absolutely anyone, anywhere, in any situation, the screaming hibbie-jibbies. I think looking for that sort of clause, which can be subtle, is probably one of the more important things when going over any contract. As long as liability is limited the rest can be planned out, but of course nobody can sanely deal with infinities. On a larger level that's the fundamental point behind limited liability corporations, the bankruptcy code, hard learned principles regarding the non-inheritability of debt, and so forth. But I don't think that's the same thing as a pay clawback, which is fundamentally capped. "You break the law, you face a maximum (with us) penalty of your salary for those years" doesn't seem unreasonable at all at c-level. They're not being asked to take retroactive responsibility for something amorphous like "failure", nor is the sum unbounded or affecting their personal net worth before taking the job, or even for that matter touching any money they made using their holding of that salary before the clawback like interest/investments. It feels like a reasonable deal: don't commit and (company related at least) felonies while on the job, if you do then your contract of employment was voided at that time and the company wants its money back. Again looking to corporate liability limitations, they don't apply if someone purposefully pierces the corporate veil for example. It's not supposed to be a shield against serious breaking of the law. I can see how some clawback terms could go way too far, with trigger clauses being too fuzzy, penalties not bearing reasonable relation to the violation, or both, but I'm not sure the concept itself is theoretically bankrupt.
- stale2002 9y ago
  Maybe it is "fair". But the problem is that the market doesn't care about "fair". Personally, I would absolutely refuse to sign such an agreement. You can't force people to accept your contract. If all the good CEOs look at your contract and run away.... well now you are stuck with only bad CEOs who were desperate enough to agree to your contract. That is the market speaking.
  - hedora 9y ago
    It sounds like the lawsuit against United focuses on payments from a bonus program and a severance package. If you have ever taken a job, you have signed an agreement that limits payments of performance bonuses and severance packages in the case of gross misconduct. I suspect the employment agreements for the executives in this case included such clauses. The board failed to enforce them at an expense of millions of dollars. The investors are right to sue.
- realusername 9y ago
  If you press the wrong button and end up making the company lose money, I don't see any reason why you should be accountable. You are paid for a job, not for having company responsibilities (otherwise you would be paid far more). Losses should be covered by processes/insurances set up by the company.
  - muninn_ 9y ago
    It'll never work that way because you would also have to pay people for the value they create when they push the right button. Also, I'm pretty sure excluding negligence a company can only fire you if you do something bad or an accident happens by law.
dclowd9901 9y ago
Uh huh, and after those 20 people dropped out, I'd be willing to bet there would be another 200 right behind them ready to pick up the reins. CEO is a position anyone can equally be successful or terrible at. So why do we insist putting the absolute most importance into it?
- poikniok 9y ago
  Why don't you start an activist private equity firm / hedge fund, it seems you should be able to make massive returns by exploiting this inefficiency in the market.
  - yorwba 9y ago
    I'm not sure how knowing that there are qualified CEO candidates who would accept such a contract leads to a way to exploit it. Can you elaborate?
    - poikniok 9y ago
      Well it seems as if he is saying he can save tons of money for the company by hiring much cheaper candidates for CEO, and by extension of his logic I presume for the entire C-suite.
      - yorwba 9y ago
        But the savings only apply if the money can actually be clawed back, so massive returns shouldn't be expected. However, it could lead to reduced risk by damping the loss caused by the CEO's malfeasance.
- icelancer 9y ago
  >anyone can equally be successful or terrible at >anyone Anyone, really?
  - TeMPOraL 9y ago
mcv 9y ago
Yes, but CEOs get outrageous salaries exactly because they carry so much responsibility. If they then mismanage the company, dodge responsibility, and aren't held accountable, then what's that outrageous pay for? They don't have to recoup all of the company's losses, but docking a serious chunk of salary is cases of behaviour that is outright unethical or malicious (rather than simply an honest mistake), should be totally acceptable.
- aglavine 9y ago
  The teal trouble there is the ougtragrrous salaries, since thrrre is no correlation at all between performance and huge compensantion

mistermann 9y ago

Hearing it this way makes complete sense.

kbenson 9y ago
Except that as a CEO, presumably they could afford insurance. Then again, insurance might correctly price itself based on how likely a CEO is to screw up, which I imagine is actually fairly common, and the insurance might be too expensive for even CEOs.

draw_down 9y ago

An incoming CEO would have slightly more leverage with the company than you had in that situation. :)

Retric 9y ago

The claw back is limited to their actual pay. Which also makes insurance far more affordable.

xoa 9y ago

>that stated I would be responsible for all monetary harm if I were to leak information about the project >If I were applying for a CEO position and saw a clause like this, I'd refuse to sign that contract, too. So United isn't wrong... I might be reading it incorrectly, but I think there is a very big difference between capped and uncapped liability/penalty clauses. What you seem to be describing facing sounds like the latter, and yes that should give absolutely anyone, anywhere, in any situation, the screaming hibbie-jibbies. I think looking for that sort of clause, which can be subtle, is probably one of the more important things when going over any contract. As long as liability is limited the rest can be planned out, but of course nobody can sanely deal with infinities. On a larger level that's the fundamental point behind limited liability corporations, the bankruptcy code, hard learned principles regarding the non-inheritability of debt, and so forth. But I don't think that's the same thing as a pay clawback, which is fundamentally capped. "You break the law, you face a maximum (with us) penalty of your salary for those years" doesn't seem unreasonable at all at c-level. They're not being asked to take retroactive responsibility for something amorphous like "failure", nor is the sum unbounded or affecting their personal net worth before taking the job, or even for that matter touching any money they made using their holding of that salary before the clawback like interest/investments. It feels like a reasonable deal: don't commit and (company related at least) felonies while on the job, if you do then your contract of employment was voided at that time and the company wants its money back. Again looking to corporate liability limitations, they don't apply if someone purposefully pierces the corporate veil for example. It's not supposed to be a shield against serious breaking of the law. I can see how some clawback terms could go way too far, with trigger clauses being too fuzzy, penalties not bearing reasonable relation to the violation, or both, but I'm not sure the concept itself is theoretically bankrupt.

stale2002 9y ago
Maybe it is "fair". But the problem is that the market doesn't care about "fair". Personally, I would absolutely refuse to sign such an agreement. You can't force people to accept your contract. If all the good CEOs look at your contract and run away.... well now you are stuck with only bad CEOs who were desperate enough to agree to your contract. That is the market speaking.
- hedora 9y ago
  It sounds like the lawsuit against United focuses on payments from a bonus program and a severance package. If you have ever taken a job, you have signed an agreement that limits payments of performance bonuses and severance packages in the case of gross misconduct. I suspect the employment agreements for the executives in this case included such clauses. The board failed to enforce them at an expense of millions of dollars. The investors are right to sue.
realusername 9y ago
If you press the wrong button and end up making the company lose money, I don't see any reason why you should be accountable. You are paid for a job, not for having company responsibilities (otherwise you would be paid far more). Losses should be covered by processes/insurances set up by the company.
- muninn_ 9y ago
  It'll never work that way because you would also have to pay people for the value they create when they push the right button. Also, I'm pretty sure excluding negligence a company can only fire you if you do something bad or an accident happens by law.

dclowd9901 9y ago

Uh huh, and after those 20 people dropped out, I'd be willing to bet there would be another 200 right behind them ready to pick up the reins. CEO is a position anyone can equally be successful or terrible at. So why do we insist putting the absolute most importance into it?

poikniok 9y ago
Why don't you start an activist private equity firm / hedge fund, it seems you should be able to make massive returns by exploiting this inefficiency in the market.
- yorwba 9y ago
  I'm not sure how knowing that there are qualified CEO candidates who would accept such a contract leads to a way to exploit it. Can you elaborate?
  - poikniok 9y ago
    Well it seems as if he is saying he can save tons of money for the company by hiring much cheaper candidates for CEO, and by extension of his logic I presume for the entire C-suite.
    - yorwba 9y ago
      But the savings only apply if the money can actually be clawed back, so massive returns shouldn't be expected. However, it could lead to reduced risk by damping the loss caused by the CEO's malfeasance.
icelancer 9y ago
>anyone can equally be successful or terrible at >anyone Anyone, really?
- TeMPOraL 9y ago

mcv 9y ago

Yes, but CEOs get outrageous salaries exactly because they carry so much responsibility. If they then mismanage the company, dodge responsibility, and aren't held accountable, then what's that outrageous pay for? They don't have to recoup all of the company's losses, but docking a serious chunk of salary is cases of behaviour that is outright unethical or malicious (rather than simply an honest mistake), should be totally acceptable.

aglavine 9y ago
The teal trouble there is the ougtragrrous salaries, since thrrre is no correlation at all between performance and huge compensantion