I had a meeting with a management team that is in clean up mode. Ideas one and two; not so good. Idea three, well, that's another story. This idea I like. This idea, two other VCs like.
So, we are rolling down the due diligence path and we hit the 2007 budget.
Line item: Bonus 315,000 accrual.
Line item: Severance $41,000
I pop my head up and ask, "What's the bonuses for, aren't you the team that tried ideas one and two?"
The response was something along the lines of:
<cough> well, we have lots of downsizing, staff reductions, and execution to do and we believe when we are done with all this, we will have a great company with lots of prospects, so we naturally (via the board) think a reward structure is appropriate.
So, I say something to the effect:
I don't think so. I think you had a shot, you blew it but we believe in idea 3 so and you've now got some battle scars, what the heck, let's take a shot. However, during the course of trying idea 1 and 2 (and failing at both), a whole bunch of people are going to loose their jobs, stress out their families and generally have a sucky -at a minimum- few months.
I think these two lines should be reversed. I'll pay you a little for having to deal with people loosing jobs and sticking around to take a shot at idea 3 but if your board and your current VCs are hot to part with 300 grand, cool, give it to the people that you are bouncing; they believed and, well, seems fair. Then, I'm good to proceed.
I was trying, obviously, to make a larger point about doing the right thing, etc. In general, I'm not happy with this sense of entitlement surrounding bonuses. Just not the way it should be. And it sets tone. $41k represented the simple minimum the company could get away with, not the culture I'd want to nurture.
I got blank stares, of course.