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Congratulations on driving a company into the ground! Have a golden parachute! https://www.cbsnews.com/news/sears-bankruptcy-court-oks-25-million-in-bonuses-fo

by Forbo 8y ago

Congratulations on driving a company into the ground! Have a golden parachute! https://www.cbsnews.com/news/sears-bankruptcy-court-oks-25-million-in-bonuses-for-top-execs/ https://www.cbsnews.com/news/sears-bankruptcy-court-oks-25-m...

deleted 8y ago
[deleted]
gammateam 8y ago
I get the tone of your post But have you considered that prosperity preaching is the bigger issue here? The idea that “success” = wealth or that they are correlated in any circumstance aside from coincidence, and that other combinations are part of a therefore broken system The reason I bring it up is because its a set of rules exclusive to lower socioeconomic groups, as opposed to a more effective set of rules
- deleted 8y ago
  [deleted]
- monetus 8y ago
  What exactly are you arguing?
- tracker1 8y ago
  Well, for the most part prosperity comes from work. After 40 hours a week of work, each extra 10% of time worked leads to something like 40% extra income. Those that do reach into upper management positions with larger corporations tend to have spent 15 years of 60-hour work weeks. I'm not saying that this is always the case, or that those are even the best priorities to have. But effort, success and wealth are definitely correlated. There are far more upper-middle to upper class people that put in their time, energy and effort. And far more than the occasional ass that never really worked a day in their life. Here are some rules to follow... * Don't have kids before marriage * Don't marry anyone you can't get along with * Stay together when you have kids * Prioritize your family's needs above your own wants Married/involved parents (plural) are the single biggest correlation factor to financial success. Edit: I say this as someone in their 40's who has never fathered a child, but been a step-parent and a couple of failed marriages. In the end, a huge portion of the population has irresponsible, even narcissistic, parents.
  - macintux 8y ago
    Prosperity often comes from family/connections, and hard work definitely doesn’t guarantee prosperity.
    - dymk 8y ago
      Neither do family/connections. You also have to work hard.
  - gammateam 8y ago
    Yes, but the upper class - which is who this story was guided by - exist because their rate of return exceeded their rate of labor. The only other commonality is that they distributed risk so that they dont have meanginful losses of money. The way this is done has nothing to do with prosperity in business, it is always value extraction, not a donation towards the nation’s jobs report. Understanding the set of rules they play by will make a lot of things make sense without the perjorative terms for the participants.
    - tracker1 8y ago
      Most people will not be able to break into the upper class. That said, there are things you can definitely do to improve your children's chances of doing so.
ArrayList 8y ago
I'll never, ever be able to comprehend this. It sickens me to the core.
- rashomon 8y ago
  So the whole mechanism to these bonuses is for the banks/investors to keep the executives around long enough to not lose the institutional knowledge and to keep the company heading in a general direction during the bankruptcy chartering.
  - deleted 8y ago
    [deleted]
  - kokokokoko 8y ago
    That is only valid when the plan of bankruptcy was to avoid liquidation. This buyout became a veiled liquidation in the late 00s early 10s[1]. They need to prop up Sears and K-Mart stores long enough to pay leases to support Seritage Growth Properties property conversions to be prepared to bring in new tenants[2][3]. I guess you need to pay those out to fool a bankruptcy court into selling you the assets in for less than they are worth to liquidators. Which you can then continue to liquidate in secret under the guise of improving efficiency. Its nice to see bankruptcy courts wising up to these schemes, but I'm not sure this isn't something lawmakers or regulators need to adjust to avoid more of. [1] https://www.chicagotribune.com/business/ct-biz-sears-lampert-esl-proposal-store-sales-0928-story.html https://www.chicagotribune.com/business/ct-biz-sears-lampert... From the linked article: "In 2015, Sears sold 235 stores, along with its stake in joint ventures involving 31 more properties, to real estate investment trust spinoff Seritage Growth Properties. Lampert is both a stakeholder in Seritage and its chairman." [2] https://www.fool.com/investing/2018/08/01/heres-why-seritage-growth-properties-stock-is-soar.aspx https://www.fool.com/investing/2018/08/01/heres-why-seritage... [3] https://www.fool.com/investing/2018/11/06/with-sears-on-the-ropes-seritage-growth-properties.aspx https://www.fool.com/investing/2018/11/06/with-sears-on-the-...
- hinkley 8y ago
  They really need a clause that’s something like “not to exceed 5% of revenue/market cap/net worth/something else” You burn it into the ground and you get 5% of nothing.
kickopotomus 8y ago
That's not a golden parachute though. Those are retention bonuses being paid to management so that they don't lose their entire staff before they are able to liquidate remaining assets and close properly. Going out of business is a process. It is not some sort of overnight ordeal. Especially not for an organization as large as Sears.
- babygoat 8y ago
  That makes zero sense. How does management getting all that money keep their staff around? They'd use that money to pay the staff if that were true.
  - kickopotomus 8y ago
    They need management/skilled workers to stay so they offer bonuses contingent on them staying on-board for some specified amount of time. You need people who know how to offload remaining inventory and other assets to clear the books. According to the article, this money is meant to be divided between ~300 corporate employees.
  - teej 8y ago
    $25M is chump change at the scale of Sears, with 89,000 employees. It's only $280 per employee which is not nearly enough money to keep everyone working.
  - mevile 8y ago
    Imagine the company is closing stores in a month and all the executives and management stop going to work tomorrow. Who is closing the stores? Who is handling exiting the staff properly? You don't want police coming and putting chains around your store and staff just having nothing but chaos for a month. You'll end up people not showing up to work. The stores might be open or not. You might end up with looting. You want an orderly exit, and they're incentivizing the management to help achieve this. Investors and employees could attempt to sue individual executives for mismanagement of a business, but if you want the government to punish business executives for failing at business you're in the wrong economic system.
  - 8y ago
lainga 8y ago
Matt Levine (of Bloomberg) would tell you to see it more as a golden incentive to stop being the CEO, if that makes you feel better
- nostromo 8y ago
  That doesn’t apply in this case as the entire company is shutting down. “Please go away money” isn’t needed when the whole company is going away.

by Forbo 8y ago

deleted 8y ago

[deleted]

gammateam 8y ago

I get the tone of your post But have you considered that prosperity preaching is the bigger issue here? The idea that “success” = wealth or that they are correlated in any circumstance aside from coincidence, and that other combinations are part of a therefore broken system The reason I bring it up is because its a set of rules exclusive to lower socioeconomic groups, as opposed to a more effective set of rules

deleted 8y ago
[deleted]
monetus 8y ago
What exactly are you arguing?
tracker1 8y ago
Well, for the most part prosperity comes from work. After 40 hours a week of work, each extra 10% of time worked leads to something like 40% extra income. Those that do reach into upper management positions with larger corporations tend to have spent 15 years of 60-hour work weeks. I'm not saying that this is always the case, or that those are even the best priorities to have. But effort, success and wealth are definitely correlated. There are far more upper-middle to upper class people that put in their time, energy and effort. And far more than the occasional ass that never really worked a day in their life. Here are some rules to follow... * Don't have kids before marriage * Don't marry anyone you can't get along with * Stay together when you have kids * Prioritize your family's needs above your own wants Married/involved parents (plural) are the single biggest correlation factor to financial success. Edit: I say this as someone in their 40's who has never fathered a child, but been a step-parent and a couple of failed marriages. In the end, a huge portion of the population has irresponsible, even narcissistic, parents.
- macintux 8y ago
  Prosperity often comes from family/connections, and hard work definitely doesn’t guarantee prosperity.
  - dymk 8y ago
    Neither do family/connections. You also have to work hard.
- gammateam 8y ago
  Yes, but the upper class - which is who this story was guided by - exist because their rate of return exceeded their rate of labor. The only other commonality is that they distributed risk so that they dont have meanginful losses of money. The way this is done has nothing to do with prosperity in business, it is always value extraction, not a donation towards the nation’s jobs report. Understanding the set of rules they play by will make a lot of things make sense without the perjorative terms for the participants.
  - tracker1 8y ago
    Most people will not be able to break into the upper class. That said, there are things you can definitely do to improve your children's chances of doing so.

ArrayList 8y ago

I'll never, ever be able to comprehend this. It sickens me to the core.

rashomon 8y ago
So the whole mechanism to these bonuses is for the banks/investors to keep the executives around long enough to not lose the institutional knowledge and to keep the company heading in a general direction during the bankruptcy chartering.
- deleted 8y ago
  [deleted]
- kokokokoko 8y ago
  That is only valid when the plan of bankruptcy was to avoid liquidation. This buyout became a veiled liquidation in the late 00s early 10s[1]. They need to prop up Sears and K-Mart stores long enough to pay leases to support Seritage Growth Properties property conversions to be prepared to bring in new tenants[2][3]. I guess you need to pay those out to fool a bankruptcy court into selling you the assets in for less than they are worth to liquidators. Which you can then continue to liquidate in secret under the guise of improving efficiency. Its nice to see bankruptcy courts wising up to these schemes, but I'm not sure this isn't something lawmakers or regulators need to adjust to avoid more of. [1] https://www.chicagotribune.com/business/ct-biz-sears-lampert-esl-proposal-store-sales-0928-story.html https://www.chicagotribune.com/business/ct-biz-sears-lampert... From the linked article: "In 2015, Sears sold 235 stores, along with its stake in joint ventures involving 31 more properties, to real estate investment trust spinoff Seritage Growth Properties. Lampert is both a stakeholder in Seritage and its chairman." [2] https://www.fool.com/investing/2018/08/01/heres-why-seritage-growth-properties-stock-is-soar.aspx https://www.fool.com/investing/2018/08/01/heres-why-seritage... [3] https://www.fool.com/investing/2018/11/06/with-sears-on-the-ropes-seritage-growth-properties.aspx https://www.fool.com/investing/2018/11/06/with-sears-on-the-...
hinkley 8y ago
They really need a clause that’s something like “not to exceed 5% of revenue/market cap/net worth/something else” You burn it into the ground and you get 5% of nothing.

kickopotomus 8y ago

That's not a golden parachute though. Those are retention bonuses being paid to management so that they don't lose their entire staff before they are able to liquidate remaining assets and close properly. Going out of business is a process. It is not some sort of overnight ordeal. Especially not for an organization as large as Sears.

babygoat 8y ago
That makes zero sense. How does management getting all that money keep their staff around? They'd use that money to pay the staff if that were true.
- kickopotomus 8y ago
  They need management/skilled workers to stay so they offer bonuses contingent on them staying on-board for some specified amount of time. You need people who know how to offload remaining inventory and other assets to clear the books. According to the article, this money is meant to be divided between ~300 corporate employees.
- teej 8y ago
  $25M is chump change at the scale of Sears, with 89,000 employees. It's only $280 per employee which is not nearly enough money to keep everyone working.
- mevile 8y ago
  Imagine the company is closing stores in a month and all the executives and management stop going to work tomorrow. Who is closing the stores? Who is handling exiting the staff properly? You don't want police coming and putting chains around your store and staff just having nothing but chaos for a month. You'll end up people not showing up to work. The stores might be open or not. You might end up with looting. You want an orderly exit, and they're incentivizing the management to help achieve this. Investors and employees could attempt to sue individual executives for mismanagement of a business, but if you want the government to punish business executives for failing at business you're in the wrong economic system.
- 8y ago

lainga 8y ago

Matt Levine (of Bloomberg) would tell you to see it more as a golden incentive to stop being the CEO, if that makes you feel better

nostromo 8y ago
That doesn’t apply in this case as the entire company is shutting down. “Please go away money” isn’t needed when the whole company is going away.