Investment News
April 21, 2008
Firms hit executives in wallet
In addition to a credit crisis, most financial services firms are also dealing with declining assets, more competition and fewer acquisitions. "I think unless things turn around in the next few months, we're going to see some really hard decisions relative to compensation," said Susan O'Donnell, managing director at Pearl Meyer & Partners LLC of New York, an executive-compensation consulting firm. "It will likely be low or no cash incentives, and fewer and smaller equity awards," Ms. O'Donnell said. "The industry is definitely shifting away from giveaway to performance."
When high visibility executives leave their jobs with big parting packages, it draws criticism. "If it involves large gross-ups, tax incentives, then the criticism is well deserved," Ms. O'Donnell said. "But large sums of deferred compensation is the money that the individual has already earned, and [that] they have set aside for a number of years, [is] another story."
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