Looting, American Style: CEOs Get Big Pre-Bankruptcy Bonuses Even When Lenders and Employees Stiffed – Rigged Game


Posted on Aug 21, 2020 by from Naked Capitalism.

Nothing like paying for failure. The Financial Times describes how CEOs who ran their companies into the ground are nevertheless rewarded with “retention bonus” payouts shortly before the business declare bankruptcy, often mere days ahead.

The absurd rationale is that it is necessary to keep a failed CEO on in order to reduce disruption. It appears instead that boards would rather pay a rich and unwarranted premium to keep a bad known quantity around, perhaps due to personal allegiances to the incumbent or because they might actually have to rouse themselves to oust the dud leader and select a replacement.

… This article demonstrates the glaring deficiencies in the US legal regime by describing how these payoffs occur even when lenders and
employees are being stiffed: