Sure, his compensation plan will reward him if the business does well and reduce his comp if it doesn't do well. However, there is very little risk to him because he doesn't have any skin in the game. If the business thrives, he will be rewarded handsomely. If the business suffers due to his mismanagement and his compensation decreases, he will just move on to greener pastures. Heads, he wins, tails, I lose. As the owner of the business, how do I protect myself against such a scenario?
A friend of my family lost one of his businesses because the CEO made a series of missteps in quick succession, then bolted. The consequences unfolded over the next several months then he lost the business. I don't want to make the same mistake. My goal is to acquire several businesses and have each one run by a CEO or GM.
How to ensure a hired CEO won't tank the business?
by an investor from New York University
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