Severance Packages???

In your case his severance package was in his contract. I'm sure they wanted him to leave with nothing, but had no choice.

That's what I'm saying though... WHY would you put into a contract when you are buying another company that the former CEO receive Millions of Dollars??? I've been in business for some years now and I really don't think that is Good Business...
I surely wouldn't buy another Firm and be willing to pay the partners over there millions for having done such a "Good" job that I was able to swoop in and buy it out from under them...

200 years ago in France, a severance package included a free trip to the guillotine. Before that, a person was tied to a tree stump and a hooded executioner with an axe (the person who received the severance pay in that time) took at least one swipe at the back of the neck of the person tied down before the head rolled.

Today, heads still roll, but only the heads of those who are shocked and appalled at people committing criminal behaviors not only getting off scott free, but getting a sizable bonus for it too, cruelty to parasitic capitalists be damned.

Money talks. People listen. And those who had little to lose, lose everything. It's amazing how humane we've become in so short a time.

Hammerhead

Maybe a better approach would be to make a performance-dependent severance package for these guys. They do a decent job running the company, then if they're fired they get their severance package. This could unfairly hurt those who, through no fault of their own, hit bad times and the company collapsed. So maybe an alternative would be clauses in these contracts that prohibit immense severance packages when the actions that resulted in the downfall are negligent or fraudulent.

A lot of the time the severance package is determined based on how long a person has worked at a company and what position they held upon their redundancy.

In which case, if going on averages of severance packages across the country, this guy must've been working there for 684 years.

The moral to the story; either live for at least 684 years or make a water-tight contract so that if you do screw up, you can walk away better off than the people you screwed over.

Welcome to the world, and the reason why I never, ever plan on continuing to work under anybody ever again!

-Cub. =o)

Every time I hear about the bullshit of the world I'm tempted to say "screw it all" and become a pirate, but then the French went and announced an international task force against this lovely profession.

I guess there's always the Boondock Saints, Crooked CEO Edition

I don't really care how long some one has worked for a company... If you are in charge of the company and the company fails, you should be held accountable, not rewarded...
If you've done so poorly that a take over has happened, there is no reason for you to benefit from the situation, considering you are the one who has caused the situation... Otherwise you should have stepped down a long time ago and let someone who was able to prevent this from happening run the company...

It's honour among thieves, or at least solidarity among potential crooks.

When a board negotiates a contract or a severance package they keep their own interests in mind as well. Changing a tradition runs the risk of starting a precedent that no one, in their current position, is usually willing to take. If not for anything else, on the account that no one knows what the future holds.

The directors of parapublic organisations are very much the same here. Most of the time they are transferred to another agency because of a potential scandal, fraud or plain incompetence, until the new organisation attempts to get rid of them as well. When it's nearly impossible to settle them anywhere, they get "retired" and are entitled to their severance bonus, for the exact same reason stated above. Everyone in such a position are at the mercy of problems within their agencies and are not willing to set a precedent that could jeopardise their own packages.

And so the wheel keeps on spinning. Until the revolution comes, then it's everybody's back against the wall! Wooo! Wait no, that no longer happens. As Hammer put it, we're "civilised" now.

I'm well aware of how the high and mighty work, doesn't mean I agree with it or have to like it...

Bafitis wrote:and I just wanted to vent a bit about it...

Just like I said in my first post... That's all... I feel it's wrong how they screw the 98% of people out of so much and then run it into the ground, not caring who it's going to affect, because they know they'll get their Millions for doing such a Bang Up Job...

Boondock Saints, eh? Well Frank, you supply the hardware and I'll help you shoot straight

No duct-crawling though Professionals don't do that

-Fred

WHY would you put into a contract when you are buying another company that the former CEO receive Millions of Dollars???

I haven't been following this, so I'm only guessing. I think the reason these things get into the contracts goes like this: A company is not performing well and the board thinks that a new CEO will help turn the company around. There are some experienced CEOs on the market who appear to have good track records with companies like yours. So you think this guy can work some magic for you and save the company. But these high-powered CEOs are a limited commodity. Other companies are also trying to woo them. So you have to offer incentives.

From the CEO's point of view, he knows that he might not be able to save your company, and if the company goes under, his salary will end, too. So the severance is sort of an insurance policy for the CEO so that, if he fails, he will still receive a certain level of benefit. Otherwise, it isn't worth his time to take the risk on your company. There are others bidding for him.

When it is this kind of situation, (the CEO is a hired gun, so to speak) it isn't necessarily that the CEO did a bad job. Sometimes the company is just beyond saving.

I don't know if this has anything to do with the situation you described. It could well be that this guy took a healthy company and ran it into the ground. In which case, I have no explanation. But if he was a hired gun trying to save a failing company, it might have gone down something like this.

I understand what you are saying Doc, but the specific situation that I'm talking about, the CEO has ran the company for years, then Warren Buffet came in and bought the company because it was beginning to go under... The CEO was never a hired gun, he had been there for years making a high 6 figure income with 7 and 8 figure bonuses... And because he ran the company into the ground for Warren Buffet to swoop in and buy it, he was given almost 50 million dollars... That kind of money could have been filtered back to the customers of the company or the other employees who have been working their ass off to keep the company afloat as much as possible...

Money goes up, $#it goes down. Way a the world.

Sadly.

-Fred

Bafitis,

It seems you don't understand. He had a contract. When you buy a company, you are responsible for the contracts. You can fire people. However, if their contract states that they receive a severance package you have to pay it. Buying a company doesn't make the previous contracts with employees null and void.

When you buy a company you buy its debts. Warren Buffett knew that buying the company included a near $50 million debt if he chose to fire the CEO.