Abstract
In all likelihood, the executve yo hire will be sucessful and the board's objectives attained. But it is possible taht the new executvie will fail to meet expection and within a matter of months will exit the company. Your orignial recommendations are about the to be put to an inevitable if ot completely reasonble test-what is the price to the comany of the executive's failure? since the dynamics of today's top executive labor market gives candidates a significant level of negotiating power, it is not practical to argue that you should avoid getting into the position of providing significant risk-protected payments to new recruits or current emploees. It si critical however, that the board of directors and company compensation experts understand the commitments they are making adn the risks they are taking when they negotiate employment terms with a new executives.
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