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Sears to pay $25.3M in bonuses to top execs after filing for bankruptcy
- spamizbad 8y agoOnce you hit C-level at a big company are you basically the free markets version of the mafia’s “made man”?
- cheez 8y agoYes
- mac01021 8y agoBut why?
- edoceo 8y agoPeople in power look out for their own
- Spooky23 8y agoJobs at that level are about who you know, not what you know. Think of it as a club of like 30,000 people in the US. 3,000 of those people are geniuses, 3,000 are idiots and trust fund kids. The rest are in the middle. You don’t want to be the director who screwed over some good old boy.
- Retric 8y agoThe MBA was specifically designed to take advantage of hands off capital. Most people that own stock don’t want to manage these companies so the people running the ship get to extract extra value. This extends down the company as the CEO does not want to manage people and is not really spending their own money, and that extends down through management. Compare things with government where people simply don’t make that much money yet it’s not hard to fill these jobs.
- tjr225 8y agoThe usual reasoning I see on HN wrt sympathy for these execs is something along the lines of "they are worth more, so they get paid more." The argument seems to fall apart when they are they very same people who ran the company into the ground. Tax the rich and help the poor- odds are they just got unlucky in a game that makes almost no sense.
- tyingq 8y agoEddie Lampart appears to have run it into the ground on purpose. He propped it up with his own personal money in exchange for the high level of control that allowed him to then pillage it. The shareholders didn't seem to see it coming.
- SubiculumCode 8y agoAlthough, sometimes a company will fail no matter how well it is managed. Chess analogy, if you lost your queen and rooks, even having the best chess computer take over your losing game might have a hard time avoiding a loss.
- paulddraper 8y agoIs that the same computer that lost your queen and rooks, or a different one?
- rayiner 8y agoThese implication from these articles is so stupid. This is a restructuring, which means that the company is supposed to emerge from bankruptcy as a viable company. Part of the process before filing should be getting rid of the people who got the company into trouble in the first place. But you need a good team in charge through the bankruptcy and on the other side. The idea that a debtor in possession should face some sort of executive compensation austerity simply means that all the people with options will jump ship.
- bb88 8y agoQuestions I do not know the answer to, but I'd like to see a response. 1. Why can't the executive bonuses be tied to getting out of bankruptcy? 2. Why is it a bonus if it's expected compensation?
- bkanber 8y agoMy response to the first, at least, is that sometimes you can do everything right but still lose. Edit to add: I am however skeptical of Sears' particular situation. I'm not sure these execs have the company's best interests in mind.
- deleted 8y ago[deleted]
- rayiner 8y agoNote that a big chunk of the bonuses here are tied to financial performance exiting bankruptcy.
- bb88 8y agoDo you have a citation for this? I see bonuses for meeting financial targets, but not for exiting bankruptcy. And they didn't publish how easy/hard hitting the financial targets would be.
- village-idiot 8y agoI can answer the latter: it’s much easier to withhold bonuses, legally. This is why many companies will shift a percentage of compensation for non-executives from salaries to bonuses: it makes it much easier to claw that money back during down times. The unspoken agreement is that that clawback will only be triggered when the other alternative is layoffs.
- artursapek 8y agoWhy is this surprising, or a news story? "Sears" is not some sentient being that decided to do this independent of the execs. "Sears" is literally the execs.
- InclinedPlane 8y agoSears is a publicly traded company.
- Spooky23 8y agoSears is a public company. You probably own some fraction of it.
- brianpgordon 8y agoIt hasn't been in the S&P 500 since 2012. In fact it's had Q appended to the ticker and been moved to the OTC market. I doubt he owns some fraction of it.
- rlucas 8y agoIts probably better to say that “Sears” is literally the board who hires the executive leadership. The execs have a lot of discretion but ultimately they are taking their marching orders from the board. In turn the board was supposed to serve the shareholders but, oops, on a BK the shareholders are screwed. So basically the creditors now own the thing. Once you’re in that spot, though, what are you going to do? Fire all levels of management above the store level? It’s not impossible but it would create absurd levels of additional risk and delay.
- i_am_proteus 8y ago>The company’s proposal will reportedly offer bonuses to 19 executives amounting to up to $8.4 million over the next six months if the company is successful in hitting certain financial goals. The employees would also be eligible for more money in bonuses if the retailer is in a position to hit those financial targets when sold, an attorney for the company reportedly said at the hearing. It appears that the bonuses are contingent on the company hitting financial goals. This is a normal practice of a company in bankruptcy trying to retain talent during a wind-down or rebuild.
- lostlogin 8y agoThe current talent hasn’t done all that well though. Maybe some turn over is needed?
- fullshark 8y agoStarting with the owner
- travisoneill1 8y agoThe bankruptcy process is literally that.
- i_am_proteus 8y agoMaybe! Bear in mind that this is a rather swift process. Finding people who are both capable of and willing to take on this sort of project is not easy. Even if they could be found, they are not likely to have deep knowledge of the internal structure of the company, which is (ironically) critical given that the company is restructuring. So, perverse as it seems, existing talent with explicitly-performance-linked compensation is often the least worst choice during a wind-down. It's bankruptcy. It's a failing company. It's ugly. Theoretically these folks are making a lot less than they would have had the company not failed.
- scoggs 8y ago
- deleted 8y ago[deleted]
- purplezooey 8y agoThe usual. Employees get thanks, execs get banks. When will we stop tolerating it. And BTW, the wealthy do not need your help defending them.
- InclinedPlane 8y agoThis is all about class distinctions. At a certain level they become indistinguishable from aristocracy. The entire premise for paying execs high salaries is that they have demanding jobs that few people have the skills to do and the work entails risks which ordinary workers do not take. And this justifies exorbitant pay and lavish bonuses. But the reality is that most of these people have no special talents, and even when they run a company into the ground and hurt people (such as those workers who end up, often, with missing pay, fucked up pensions, and no jobs, etc.) and the businesses they are supposed to be stewarding, they still end up being awarded bonuses.
- brianpgordon 8y agoSkills, yes, and pedigree too to some extent since it's important to the board that shareholders are confident in management. I'm not sure where you're getting "risks which ordinary workers do not take" from though. I don't see that being a part of the equation. It seems particularly strange in the case of oil companies or security or military contractors where workers face actual physical danger on the job.
- shados 8y agoNot just skills, but connections as well as the willingness to essentially leave their normal life behind. Honestly, the skills are the easy part, which is why a lot of people see what they do and think "Welp, I could do this too!".
- lovich 8y agoI think you'll find most people would take on this level of stress and change in lifestyle for 5 years to garuntee that they would never have to work again. Additionally it's not like the executive leadership doesn't push stress onto their employees. You've never had or seen a boss pulling in 7 figures emailing their employees earning a fraction of that after midnight and being upset at the lack of response? The executives get this pay because they can. Any argument about it being moral or ethical falls apart when you look at reality
- deleted 8y ago[deleted]
- SubiculumCode 8y agoTo my mind, the issue here is not that a bankrupt company payed bonuses to executives who managed the bankruptcy process well. To my mind, the issue is that executives are paid so exorbitantly well relative to non-executive employees, and this issue is not specific to Sears or other trouble companies.