Why do executives get bonuses when their company goes bankrupt?

[GregW]

Them that has, gets. Them that has more, gets more.

I wonder what would happen if the bankruptcy courts started to negate the contracts and the bonuses? Maybe puts the creditors and emoployes ahead of tehe executives. That would be interesting.

[metropolistraffic]

To keep them there. :P

Execs are known to jump jobs. And, if a company goes bankrupt, well, why would they want to stay there? Oh yeah. That 250,000 dollar bonus! That's why.

[Catsofthebase3]

Ways big name executives make off like bandits.

1.Contract bonuses - You're right! they get a big bonus check no matter how full of holes the company is. The golden parachute gives them something in case they're fired for filling the company full of holes. Sounds nice huh? "You're a terrible boss! You're fired! Here's 10 million dollars, now leave!"

2. Options deals - Some of you have probably gotten company stock, or options contracts regarding company stock at your places of employment. Well, executives get similar deals, except its for a LOT of stock, and a LOT of very lucrative, horribly undervalued options. They can't exercise them immediately (usually), but it's worth millions. I should mention that options are just contracts, and very hard to valuate correctly, which is why they're usually way undervalued, for tax purposes.

3. Salary and Benefits - Have you ever seen one of those executive contracts post-lawyer? Or their benefits packages? They're so convoluted, no one can figure out what's taxable and what isn't.

Seem unfair? Well, that's probably because it is .

[FarNorthDallas]

Here's a good article about it in Portfolio magazine. The No-Consequences Economy -
Banks Shirk Subprime Responsibility - Wall Street Column - Jesse Eisinger - Portfolio.com (http://www.portfolio.com/views/columns/wall-street/2008/03/17/Banks-Shirk-Subprime-Responsibility - broken link)