Time and again, we see CEOs and similar executives make horrible decisions that massively damage a company both financially and in terms of reputation and the perpetrator is forced to resign, yet receives so much money as a going away present you’d think they’re being rewarded for their fuck up. Why??
Because the people that set compensation is the board of directors, and they are composed of other executives. They want to set the precedent for themselves.
Also, they are all generally good friends, and want to make sure they keep the wealth “where it belongs”
Correct, also execs have strong bargaining power and entire industry of advisors to advocate for their comp.
This is opposed to wage slaves who are atomized and forced to negotiate for themselves while most industries collude to fix their wage. Many industries share their salary data to third party aggregator who will in turn provide reports that enable companies to fix wages for specific professions/industries. This is illegal but as you might know, government does enforce rules against “legal people” only organics who are of “lower quality”
Not always, but often, making unpopular changes is precisely what the executive is being paid to do. Their job is to implement these changes, make sure that they are the one everyone gets upset with, and then take that anger with them when they leave.
To make them go away before doing more damage although their contract is still valid for some years. Same with a messie as tenant, you essentially bribe them to go before they damage the flat even more.
Decorum of the rich and wealthy. You wouldn’t understand, peasant. /s
Essentially, there aren’t a lot of candidates for roles like “CEO” at really large companies, so they want to attract the best candidate from a limited pool. Those people get to ask for whatever crazy thing they want if the board really wants them, and golden parachutes aren’t illegal, so why not?
Are you saying that these CEOs have it in their contracts that they get a ridiculous amount of money if they fuck up enough to get fired? Doesn’t that incentivize them to be reckless?
No candidate for those jobs ever believes he will fuck up, nor that disastrous results are their direct responsibility. They always believe that the only reasons they’d be fired are political infighting or an investor/BoD revolt. Therefore, they want golden parachute clauses to protect them from such completely unjustified threats and criticism.
They’re usually just separation clauses - i.e. whenever Joe Blow leaves his CEO position, he gets $X million. Like a lump-sum pension, which is more money that they don’t have to call salary.
Because there are also CEOs and similar executives that do NOT fuck up and make billions for their companies. Big risk, but big reward.
Some would argue the workers make the companies all their money…
OK, if it’s so easy and the workers create all the value, those workers are free to start their own competing company and become the billionaires.
