Investors have long complained that too many top executives walk away with enormous paychecks for average performance, or worse. Analysts often point the finger at employment and severance contracts, which can guarantee big salaries and bonuses long before on-the-job performance can be assessed and call for additional payments if the executive is ousted. Companies argue that this is necessary to attract and motivate top talent, and is the price they pay to induce executives to sign noncompete agreements.
Should executives have employment and severance contracts? What do you think is a fair way to determine how much executives should be compensated when they are forced to leave a job?
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