NYT’s comp experts: Pay restrictions didn’t matter (much)

Posted by Marc Hodak on March 23, 2010 under Reporting on pay | Be the First to Comment

Of the 104 senior executives whose pay was set by the federal pay regulator in the last two years, 88 executives, or nearly 85 percent, are still with the companies even though their pay was drastically cut back, according to people briefed on the government data.

The relative stability, at least within the executive suite, suggests that a soft job market, corporate loyalty and personal pride helped deter the feared management exodus at the companies hardest hit by the pay rules.

I’m sure every board is ready to apply that magic to their own companies.

Oh, some questions left out in this analysis:

– What was the senior executive turnover of peer companies not subject to these restrictions in 2009? Is it close enough to 15% to render “relative stability” as the appropriate verdict? (Best guess: peer turnover would be in the 9 to 12 percent range last year.)

– What was the composition of that turnover? Did they lose their best people (as is usual in a cash crunch) or their average people (who tend to hunker down in bad times)?

– What about the effect of promised future compensation? Lloyd Blankfein and Jamie Dimon had a sense that whatever they gave up in 2009 they could kind of make up in 2010 to 20??. What would these restrictions do if the Pay Czar threatened to hover around for several more years? (Hint: We got a clear sense of that at AIG, what could only be called an exodus of their top people. We’ll see how it works at Government Motors.)