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How Do Big Payments to CEOs Who Took Their Companies Into Bankruptcy Maximize Shareholder Value?

Summary:
Bankruptcy typically means that shareholders are largely or totally wiped out. This should raise the question of why CEOs of companies that went bankrupt are getting large bonuses from these companies, as this NYT article points out. These payments are consistent with a story where corporate boards primarily owe their  allegiance to top management, not to shareholders. It would have been worth noting this fact. The post How Do Big Payments to CEOs Who Took Their Companies Into Bankruptcy Maximize Shareholder Value? appeared first on Center for Economic and Policy Research.

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Bankruptcy typically means that shareholders are largely or totally wiped out. This should raise the question of why CEOs of companies that went bankrupt are getting large bonuses from these companies, as this NYT article points out.

These payments are consistent with a story where corporate boards primarily owe their  allegiance to top management, not to shareholders. It would have been worth noting this fact.

The post How Do Big Payments to CEOs Who Took Their Companies Into Bankruptcy Maximize Shareholder Value? appeared first on Center for Economic and Policy Research.

Dean Baker
I am a senior economist at the Center for Economic and Policy Research (@ceprdc). I also run the blog Beat the Press (@beat_the_press)

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