Kevin Drum Loser CEOs Can Never Truly Lose, Pandemic Edition

If you win, they pay you big bucks. If you lose, they pay you big bucks:

The coronavirus recession tipped dozens of troubled companies into bankruptcy, setting off a rush of store closures, furloughs and layoffs. But several major brands, including Hertz Global, J.C. Penney and Neiman Marcus, doled out millions in executive bonuses just before filing for Chapter 11 protection, according to a Washington Post analysis of regulatory filings and court documents.

Since the pandemic took hold in March, at least 18 large companies have rewarded executives with six- and seven-figure payouts before asking bankruptcy courts to shield them from landlords, suppliers and other creditors while they restructured, the Post review found. They collectively meted out more than $135 million, documents show, while listing $79 billion in debts.

The putative reason for this is that all these loser executives will bail out if they don’t get their bonuses. And maybe they would. But it’s telling that apparently the boards of these companies can’t even fathom promoting one their many vice presidents to take over the job, perhaps with some kind of incentive for negotiating favorable Chapter 11 terms. Nope. It’s the loser CEO or nothing.

I suppose part of this is laziness, but part of it is probably an unwillingness to admit that the CEO they hired has done a bad job. He’s such a great guy! Customers love him! Events just didn’t go our way.

Warning: Don’t try this trick if you are not part of the C-suite. It won’t work.

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