Accrue the money, bankrupt one month earlier. Pay the money.
Of course this means companies think twice before hiring anyone.
So yeah, if one thinks this is wrong, they need to take it up with their lawmakers. This is not something private companies can change on their own, otherwise all the well behaved companies would be much more likely to go out of business and only the poorly behaved ones would remain.
They used to have 1,500, before they laid off 1,000 of them.
It may not be that clear cut ...
From the article: The startup, valued by investors last year at $3.8 billion, had already whittled its staff down to about 500 people from a peak of 1,500, and was on track to run out of money in a matter of weeks
If there are any outstanding debt obligations (which I expect there are), then those would be senior to voluntary severance even if the company hadn't spent its literal last dollar.
I appreciate you were focused on the exec compensation part of the dialogue. Just noting that the money was not yet all gone.
As such, spending your last cent to try to find a lifeline makes far more sense than calling it quits early. It's also certainly not in the interests of investors to just call things off.
Convoy knows their situation very well, and it hasn't changed for 6 months.
As investors and founders you can make the call and be responsible to your employees, maintaining a good reputation for yourself (as founders), and enabling future deal flow (as investors) or this situation where they get 0 help transitioning.
This wasn't an early stage company. They're a late stage (series D iirc?) company that was valued at 1 billion+ with 5000 employees. It's not fair to characterize this with the same risk profile as an early stage co., and the expectations here should be higher in terms of severance and help.
And of course, we should prioritize a class of people who BY DEFINITION have significantly more resources available to keep themselves alive and safe and happy over the well being of 500 normal people.
Indeed.
"We hoped this day would never come. We spent over 4 months exhausting all viable strategic options for the business."
If the CEO was still speaking for the company then he's being paid.
If it's not certain they are getting paid even while things are still working, how can you say he is getting paid after running out of money? Unless you mean "paid with worthless stock" in which case I would say "you can't fund severance and health care with worthless stock."
Because the executives (almost) always make sure that they are compensated before the fall.
Often after having forgone salary for a while, also.
