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> While it was losing hundreds of millions of dollars a year, Steward paid at least $250 million to its chief executive officer Can somebody explain to me the

> While it was losing hundreds of millions of dollars a year, Steward paid at least $250 million to its chief executive officer Can somebody explain to me the reasoning behind these payouts? Isn't this an incredible incentive for ceo's to make unsustainable changes, that look good by the time the bonus is payed out, but then destroys the company in the long run? But at that point this CEO is ofc already long gone with his 250mil ?

Eddy_Viscosity2 2y ago
Theoretically, the board of directors would intervene to prevent this. But in practice, boards are 'captured' entities filled with relatives and cronies of the CEO. So, the answer is that yes, the incentive exists for CEOs to rape a company for personal benefit. And it happens frequently.
- josefritzishere 2y ago
  Is there a legal mechanism which might prevent, or penalize the capture of boards of directors? It's an obvious conflcit of interest, but I'm not sure if it's illegal.
  - Eddy_Viscosity2 2y ago
    Sometimes. A recent example of this is Elon's giant pay package from Telsa. A shareholder sued saying it was unjust enrichment and the board was full of cronies. The shareholder won, initially. But then Musk moved the incorporation of Tesla from Delaware to Texas where he knew he'd get less resistance from the law. So he got what he wanted eventually. https://www.cbsnews.com/news/elon-musk-pay-package-vote-cbs-news-explains/#:~:text=That%20package%2C%20approved%20in%202018,the%20massive%20payout%20was%20fair https://www.cbsnews.com/news/elon-musk-pay-package-vote-cbs-.... edit: Looks like I was incorrect about some of the details on Elon's pay suit as commenters have identified below. However the gist is that there exist legal avenues to reign in CEOs, but I can't think of any example where they have been ultimately successful.
    - bryanlarsen 2y ago
      Elon got what he wanted by repeating the shareholder vote. The move from Delaware to Texas had not yet happened at the time of the repeated shareholder vote.
    - financetechbro 2y ago
      *only applies to publicly traded companies
    - bananapub 2y ago
      that's not quite right. the court case was about whether the Company had sufficiently informed shareholders of the fact that the board was full of cronies. the re-vote information included details of the court case they'd just lost on the topic, presumably making the shareholders sufficiently informed about how corrupt the board was. in addition, to avoid the hippies of the Delaware Chancery court ever doing anything he didn't want in future, Musk also re-domiciled the company to Texas.
bananapub 2y ago
> Can somebody explain to me the reasoning behind these payouts? Isn't this an incredible incentive for ceo's to make unsustainable changes, that look good by the time the bonus is payed out, but then destroys the company in the long run? But at that point this CEO is ofc already long gone with his 250mil ? the reasoning is the board were negligent

Eddy_Viscosity2 2y ago

Theoretically, the board of directors would intervene to prevent this. But in practice, boards are 'captured' entities filled with relatives and cronies of the CEO. So, the answer is that yes, the incentive exists for CEOs to rape a company for personal benefit. And it happens frequently.

josefritzishere 2y ago
Is there a legal mechanism which might prevent, or penalize the capture of boards of directors? It's an obvious conflcit of interest, but I'm not sure if it's illegal.
- Eddy_Viscosity2 2y ago
  Sometimes. A recent example of this is Elon's giant pay package from Telsa. A shareholder sued saying it was unjust enrichment and the board was full of cronies. The shareholder won, initially. But then Musk moved the incorporation of Tesla from Delaware to Texas where he knew he'd get less resistance from the law. So he got what he wanted eventually. https://www.cbsnews.com/news/elon-musk-pay-package-vote-cbs-news-explains/#:~:text=That%20package%2C%20approved%20in%202018,the%20massive%20payout%20was%20fair https://www.cbsnews.com/news/elon-musk-pay-package-vote-cbs-.... edit: Looks like I was incorrect about some of the details on Elon's pay suit as commenters have identified below. However the gist is that there exist legal avenues to reign in CEOs, but I can't think of any example where they have been ultimately successful.
  - bryanlarsen 2y ago
    Elon got what he wanted by repeating the shareholder vote. The move from Delaware to Texas had not yet happened at the time of the repeated shareholder vote.
  - financetechbro 2y ago
    *only applies to publicly traded companies
  - bananapub 2y ago
    that's not quite right. the court case was about whether the Company had sufficiently informed shareholders of the fact that the board was full of cronies. the re-vote information included details of the court case they'd just lost on the topic, presumably making the shareholders sufficiently informed about how corrupt the board was. in addition, to avoid the hippies of the Delaware Chancery court ever doing anything he didn't want in future, Musk also re-domiciled the company to Texas.

bananapub 2y ago

> Can somebody explain to me the reasoning behind these payouts? Isn't this an incredible incentive for ceo's to make unsustainable changes, that look good by the time the bonus is payed out, but then destroys the company in the long run? But at that point this CEO is ofc already long gone with his 250mil ? the reasoning is the board were negligent