explain it for at 200 words

Business & Finance
Tutor: None Selected Time limit: 1 Day

What's you view on the multi-million dollar severance packages extended to top-level CEO's who lead their firms to disaster? Should executives walk away empty-handed if their firms fail? Should they be penalized? Or is a hefty severance package a requirement for attracting top-level talent? 

Aug 17th, 2015

Thank you for the opportunity to help you with your question!

Head hunting for a top level CEO is a very tedious task. Top level CEO bring about investor and shareholder confidence, and at times they even affect the stock prices. Companies, therefore, do their very best to ensure that they offer very lucrative terms to top CEOs so as to motivate them to join their companies and not to leave. This lucrative terms are what have led to top CEOs leaving with multi-millions despite the companies making hefty losses.

However, I believe this is not fair and action must be taken to ensure that such scenarios stop occurring. I believe that Top CEOs should be offered performance contracts such that they are paid depending on the perfomance of the company. This kind of contracts would ensure that CEOs went home with nothing if the company made losses, and go home with multi-millions if the companies make profit. However, I believe that headhunting for CEOs is a very difficult job and no top level CEO would accept such a contract. I believe only a change in Company law could address such scenarios.

Please let me know if you need any clarification. I'm always happy to answer your questions.
Aug 17th, 2015

do you think they should they be penalized? Or is a hefty severance package a requirement for attracting top-level talent? 

Aug 17th, 2015

Okay let me update

Aug 17th, 2015

Head hunting for a top level CEO is a very tedious task. Top level CEOs bring about investor and shareholder confidence, and at times they even affect the stock prices. Companies, therefore, do their very best to ensure that they offer very lucrative terms to top CEOs so as to motivate them to join their companies and not to leave. This lucrative terms are what have led to top CEOs leaving with multi-millions despite the companies making hefty losses. This is because the contracts assure them of such hefty packages.

However, I believe this is not fair and action must be taken to ensure that such scenarios stop occurring. I believe that Top CEOs should be offered performance contracts such that they are paid depending on the performance of the company. This kind of contracts would ensure that CEOs went home with nothing if the company made losses, and go home with multi-millions if the companies make profit.

I do not believe that Top CEOs should be penalized for losses that occur unless the losses were as a result of illegal activities. However, if no illegal activity occurred, top CEO’s should not be penalized as business tends to be volatile and the losses might have been beyond their control. I, therefore, believe performance contract would be best. However, headhunting for a top CEO is a very difficult job and no top level CEO would accept such a contract. Hefty severance packages will, therefore, remain a requirement for attracting top-level talent. Only a change in Company law can change the situation.


Aug 17th, 2015

Thank you so much!


Aug 17th, 2015

Welcome.

Aug 17th, 2015

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