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Comment by dfragnito | Hacker News Reader

I live in Rochester NY, home of Eastman Kodak which is going through a bankruptcy, and looks like it may be coming out of it (probably will go back in it or get sold in my opinion).

I an not suggesting that Kodak's downfalls was due to management looting the company but we do see evidence of upper management grabbing all they can get. Just recently upper management asked for millions of dollars of bonuses (earmarked for upper management only) if Kodak successfully pays off its creditors. Bonuses use to be rewarded for turning a profit, apparently now you get rewarded for just paying your bills.

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Bonuses aren't just rewarded for making a profit.

Let's say a company like RIM is losing $500M/yr. If they hire a new CEO who comes in and reduces that to a lose of $10M/yr, should he get a bonus?

Not till they turn a profit. He still gets a more than adequate salary for his work. A bonus not linked to performance is no longer a bonus, but rather another way of paying wages.

Then how would you properly incentivize someone to come in to take a company out of such dire circumstances?

Someone with the talent to take a 500M loss and reduce it to 10M certainly would command the same salary with more upside at a solvent company.

uh, correct me if i'm wrong but isn't that her job to do that and typically those jobs pay extremely well?

And on the flip side, if there was a large bonus for reducing debt by that much by year end, would that incentivize this person to do anything possible to reduce debt even at the cost of the companies long term survival?

Expanding on that it seems reasonable to consider the possibility that bonuses for some year end goal could be causing CEO's and others to do whatever it takes to get their bonus while damaging companies long term survival, because they put their bonus first not the company.

It's a case of: "Well, the operation was a success, even if the patient died."

A turnaround isn't a success until the company is in the black. If the new CEO just ends up producing a smaller crater (no such thing as a "soft landing" in bankruptcy court), he still failed.

He still gets a more than adequate salary for his work.

Wait, are we talking about a real situation?

Looks to me like you declared something about what is "adequate salary" without knowing what that salary is, what the bonus model being speculated upon would be, or what the opportunity cost for that hypothetical CEO would be for taking on such a high-risk position.

Upon what information do you base even having an opinion on what salary is adequate?

The example given by the OP was RIM (in a situation where they are losing money) - CEOs received $1.2 million each as a salary until recently, total compensation was $5.1 million in 2011. That seems more than adequate to me for a company bleeding revenue and market share.

My point was that a bonus taken in lieu of salary is no longer a bonus but a wage, and extra rewards should be commensurate with the company's performance, not taken for granted for people at the top, who ultimately should take responsibility for the wellbeing of their company and employees. That means taking a cut in bonuses and perks when the company is doing badly, whether it is their fault or not, just as employees may lose their job, even if they do a good job but the company is struggling.

And if you have a CEO running another company who is already making $5 million/year who has a great track record and could be the best bet for staunching the bleeding at RIM and maybe even turning it around.

Why would that person take a risk of going to RIM?

My point is that sideline "this is an adequate salary" ranks up there with saying, "that's an adequate temperature for boiling that liquid". Well what's the liquid? What's the ambient pressure?

IMHO there is no correlation between high pay and competence, particularly at the top end of the scale.

These blanket statements you keep making remind me of this article:

http://www.lifeslittlemysteries.com/2187-incompetent-people-...

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