# Professor David Yermack explains why large severance packages are common in the entertainment industry

1 Faculty News November 21, 2016 ![Hollywood Reporter logo 192 x 144](/sites/default/files/styles/246w/public/assets/images/hollywoodreporter192x144.jpg?itok=ONoy4qM0)>

Excerpt from [The Hollywood Reporter](http://www.hollywoodreporter.com/news/hollywoods-latest-exec-fad-getting-big-bucks-do-nothing-949100) -- "'Severance is an insurance policy. In the entertainment business, you are putting a product out there that requires imagination. It's inherently risky to be in a creative business,' says compensation expert [David Yermack](http://www.stern.nyu.edu/faculty/bio/david-yermack), a professor at NYU's Stern School of Business. 'And you want to provide a safe landing for those you are firing without cause. It's a signal to the next group of managers that you will take care of them.'"

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