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I wonder why boards don’t give CEO’s a contract in which their compensation can be retroactively clawed back if it is later decided that decisions the CEO made
by kevinventullo 3y ago
I wonder why boards don’t give CEO’s a contract in which their compensation can be retroactively clawed back if it is later decided that decisions the CEO made cost the company a great deal of money. Of course lawyers would likely be involved to determine this precisely.
In some ways, this would justify the outrageous compensation packages due to the risk implicitly involved. And, it seems to me it would align incentives a little bit better between CEOs and shareholders.
- Arnt 3y agoPut differently, you wonder why being able to claw back compensation isn't a business advantage. Why it isn't something that a few companies have tried and then others emulated because of the visible success. Shrug. Personally, I suspect that boards are focusing on business outcome, think that hiring great negotiators as executives helps with business outcome, and accept that great negotiators will negotiate great terms for themselves against the company.
- tw04 3y agoBecause they're all on each other's boards. There's no incentive to do otherwise. And all they need to do is cater to wall street to maintain their positions because the vast majority of their shares are tied up in 401k funds insulating them from any oversight.