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The author mentions the stock options, which create incentive for success, but points out that the problem is no downside risk. Golden parachutes are counter to

The author mentions the stock options, which create incentive for success, but points out that the problem is no downside risk. Golden parachutes are counter to those incentives.

AlbertCory 3y ago
Thank you. "Skin" is risk, not just reward.
- fastball 3y ago
  The risk is supposed to be your comp going down if you make the stock price go down.
  - mitthrowaway2 3y ago
    > Yes, the Board can arrange it so they make a lot of money if the company does well, but if it tanks, they’ll still be OK. Here are some examples[...] Do you disagree with this thesis?
  - AlbertCory 3y ago
    No, "your comp going down" is not "risk."
    - fastball 3y ago
      So is a founder that owns 100% of their company not exposed to "risk" because the worst that can happen is the value of the thing they have goes down? What exactly is risk to you? Losing a hand if the company does poorly?
      - mitthrowaway2 3y ago
        Depends on the founder's situation, whether they're independently wealthy and whether their investors (if any) have taken on some of the risk. But for some bootstrappers, they get next to no salary and if their company fails, they might lose their house and be unable to feed their family. They're truly all-in. That's not going to happen with the first example from the article: > Fiorina received a larger signing offer than any of her predecessors, including: US$65 million in restricted stock to compensate her for the Lucent stock and options she left behind, a US$3 million signing bonus, a US$1 million annual salary (plus a US$1.25–US$3.75 million annual bonus), US$36,000 in mortgage assistance, a relocation allowance, and permission (and encouragement) to use company planes for personal affairs.
      - AlbertCory 3y ago
        Read the book.
        AlbertCory 3y ago
        To clarify that flippant reply: I have four examples of skin in the game, at the end of the article. Putting "losing your comp" in that category is trivializing. Risk is something serious and irreparable.

The author mentions the stock options, which create incentive for success, but points out that the problem is no downside risk. Golden parachutes are counter to those incentives.

AlbertCory 3y ago

Thank you. "Skin" is risk, not just reward.

fastball 3y ago
The risk is supposed to be your comp going down if you make the stock price go down.
- mitthrowaway2 3y ago
  > Yes, the Board can arrange it so they make a lot of money if the company does well, but if it tanks, they’ll still be OK. Here are some examples[...] Do you disagree with this thesis?
- AlbertCory 3y ago
  No, "your comp going down" is not "risk."
  - fastball 3y ago
    So is a founder that owns 100% of their company not exposed to "risk" because the worst that can happen is the value of the thing they have goes down? What exactly is risk to you? Losing a hand if the company does poorly?
    - mitthrowaway2 3y ago
      Depends on the founder's situation, whether they're independently wealthy and whether their investors (if any) have taken on some of the risk. But for some bootstrappers, they get next to no salary and if their company fails, they might lose their house and be unable to feed their family. They're truly all-in. That's not going to happen with the first example from the article: > Fiorina received a larger signing offer than any of her predecessors, including: US$65 million in restricted stock to compensate her for the Lucent stock and options she left behind, a US$3 million signing bonus, a US$1 million annual salary (plus a US$1.25–US$3.75 million annual bonus), US$36,000 in mortgage assistance, a relocation allowance, and permission (and encouragement) to use company planes for personal affairs.
    - AlbertCory 3y ago
      Read the book.
      - AlbertCory 3y ago
        To clarify that flippant reply: I have four examples of skin in the game, at the end of the article. Putting "losing your comp" in that category is trivializing. Risk is something serious and irreparable.