I have no particular knowledge of this specific company, and it's quite possible that their manager payouts are overly high.
But: Somebody's paying $100M for this company. That's much less than the company was hoped to be worth, but it's still a huge chunk of change. The buyer is trying to get something for that investment. That means they need the company to perform in some way. Maybe just shut down in an orderly fashion while they monetize the client list in some manner, but for $100M, I'd guess that they want to operate the company somehow.
For that, they need the cooperation of the senior managers. So they pay them to cooperate. It kind of sucks, but you have to give the managers of the company some incentive to stick around and help you do whatever it is you want to do with the company instead of saying "Fuck you we're out of here."
If it helps, I'm certain that $750k - $7M was much smaller than the payout those execs were hoping/expecting to get from a more successful outcome.
> ...but for $100M, I'd guess that they want to operate the company somehow....For that, they need the cooperation of the senior managers. So they pay them to cooperate...
I'm not sure how much cooperation I'd want from "senior managers" who managed to manage a company in to 1/7th of what it was valued at. If it was intentionally fraudulent... you want those people around and making decisions still? If it was incomptence... you want those people around and making decisions still?
Yes, I'm oversimplifying, and no doubt there's always other factors to consider, but this thinking bothers me along the same lines as "we needed to pay those large bonuses to keep the CEO around - we couldn't get anyone else as capable and experienced!" while the company is simultanesouly tanking.
It's not about "we couldn't get anyone else as capable and experienced," it's just about "we couldn't get anyone else as experienced."
I don't think that anyone in these situations deludes themselves that the management team of a company are paragons of greatness, but doing a sudden replacement of the entire senior management team at a time when the company's morale is very low to start with and where you're certainly trying to make some major changes to the organization is a recipe for disaster. Bringing on new senior management takes time. Coming up to speed on the workings of an even moderately sized company takes time.
But, just because the valuation went down, doesn't mean it's the management's fault. Maybe the old valuation was based on wishful thinking, and over time it sunk in [to everybody] that there are core problems with the product/biz.model/etc that they can't solve. This I've seen multiple times are startups. There's some fundamental problem which is masked by growth. Management keeps hiring people and hopes somebody eventually magically fixes the problem. After ~5 years the company accepts the problem. OR a new competitor emerged, etc.
Even a shitty management team is a management team that keeps the company running.
"But, just because the valuation went down, doesn't mean it's the management's fault."
Yes, it does. The justification for the extremely high salaries and bonuses that execs get is because they are the ones who are "taking risks" and "are responsible for the company." Here, they are literally being rewarded for failure, and at the expense of people who were actually doing work.
> Here, they are literally being rewarded for failure,
Because who else would 'risk' so much - like only getting a $400k bonus instead of an $1m bonus? It takes special character and fortitude to steel yourself for such challenges!
It sounds like this particular company was engaged in 'wishful thinking' re: the valuation, and sounded like they were using deception at the core (if they were trying to deceive employees, probably tried to deceive investors too).
But: Somebody's paying $100M for this company. That's much less than the company was hoped to be worth, but it's still a huge chunk of change. The buyer is trying to get something for that investment. That means they need the company to perform in some way. Maybe just shut down in an orderly fashion while they monetize the client list in some manner, but for $100M, I'd guess that they want to operate the company somehow.
For that, they need the cooperation of the senior managers. So they pay them to cooperate. It kind of sucks, but you have to give the managers of the company some incentive to stick around and help you do whatever it is you want to do with the company instead of saying "Fuck you we're out of here."
If it helps, I'm certain that $750k - $7M was much smaller than the payout those execs were hoping/expecting to get from a more successful outcome.