This is exactly my frustration with the current market crisis we are currently going through. Those that facilitated the crisis with irresponsible risky behavior are free of any sort of financial risk. It is all reward, no risk at the leadership level and this introduces what I believe are unacceptable consequences. Take a look at the list of multi-millionaires created through management failures. Required reading here.
Which is exactly why we need to re-establish a link between risk and reward in public companies. The first step should be the following law:
If the government must step in and provide any sort of financing or guarantees for any part of a public company’s business, then all officers and directors lose all rights to severance pay and all outstanding vested or unvested options or warrants immediately become canceled. In the event the CEO of such corporation is not fired, but instead chooses to step down voluntarily, then the last 12 months of earnings is considered to be an interest free loan which the CEO must pay back over no more than a 10 year period.