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Why should I Trust my new CEO?

After a lengthy negotiation, the CEO and I verbally agreed to a compensation structure.  We took the next step and broke bread with my wife to get comfortable with each other in a social setting.  But when I received the offer letter, a significant portion of the base salary was replaced with a bonus structure in an attempt to minimize the conversion fee to be paid to the executive staffing firm.  Even though the overall compensation is the same, my question is, should I trust the CEO? I'm concerned that if he is willing to find a way to get out of paying the executive staffing firm their due compensation, he'll do the same to me.

Answers

Jeff Taylor
Title: CFO
Company: Communications Co.
(CFO, Communications Co.) |

Well, this is wrong on many levels. First off, you had an agreement with him and he changed it. That's not right to you or the recruiter. In fact, I'm surprised you mentioned the recruiter b/c I'd be a lot more worried about my own deal. As for the firm - it's weasly for sure, but if their agmt is loose and he can get away with it by structuring your deal advantageously, I'm hard pressed to find fault.

But back to your deal - that's not a good sign. Base salary is not something to be trifled with, but it seems like he changed it around significantly. A CEO who did that is hard to trust. Now, I can imagine him bringing your deal to the board (or the chairperson) and them pushing back. That happens. But then the right thing to do is to call you up and have a chat about what happened. He should not just send you an update out of the blue. He's either not confident that he can tell you that sort of a story (bad news) or he's trying to pull a fast one (also bad news). Be vigilent and good luck.

Topic Expert
Mark Richards
Title: VP of Finance & Operations
Company: RBA Consulting
(VP of Finance & Operations, RBA Consulting) |

Mark,

I've had the same (with a PE firm) and had colleagues experience the same issue of a major difference in the what was the 'agreed' position. I can share our response.

The first part of the response was to note the change in compensation, ask them for an explanation of the change and then recommend a time for a call. Putting this first set the expectation that the negotiations had not concluded.

The second part was the compensation as agreed from discussions including the key points that were the logic points of comp design - often these were major parts of our discussion and not easily forgotten.

The explanation may be one of the items that Jeff pointed out above. Often it can be a reversal to their initial ideas that never got updated - so try to remember where they started (or where the board agreed).

Before you hit 'send' you need to determine how much you are willing to accept in 'change'.

Lastly, if you do pursue, I recommend you get in the habit of clearly documenting discussions, decisions, etc. with the CEO - sometimes the only way you get clarity is when you provide it.

Hope this helps.

Mark

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

Having been on the receiving end of this scenario a few times, I would have to ask myself what are my prospects of:

a) staying employed in situation where I can't trust the CEO
b) in a situation where his/her business ethics are so different than mine
d) my exposure (fiduciary) to litigation
e) my ability to find new work
e) the length of time I think that search will take
and f) if I were to leave, can I financially afford to go

Sometimes it is just easier to say good bye.

Topic Expert
Randy Miller
Title: Partner
Company: CFO Edge
(Partner, CFO Edge) |

If the CEO's true intent was to minimize the amount that he had to pay to the recruiting firm, then he should have been upfront with you at the beginning. By changing the deal after the fact and without talking to you he is telling you that his word is not good. It also brings into question everything else he has told you about the company. What other issues has he hidden or mis-represented?
If you choose to go forward with the revised offer, you should seriously investigate the true state of the company, and keep your own recruiter contacts active - you may need them.

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