Expert Perspective from Grahall
In an April 12, 2009 article titled “Crisis Altering Wall St. as Stars Begin to Scatter” in The New York Times, Graham Browley and Louise Story discussed how boutique firms and foreign banks “see a rare chance to upgrade talent … by luring top minds who would not have considered moving from Goldman or Morgan Stanley in flush times.” These “top minds” are faced with the double whammy of a 30% to 50% reduction in net worth caused by the decline in stock prices coupled with the limitations in future earnings imposed on compensation that come with the tax-payer support. Boutique and foreign firms can structure pay packages that have great appeal to top talent.
Grahall sees this as just the tip of the iceberg as far as executive turnover is concerned, and not just in the financial services industry. As the media and public attention continues to focus on executive pay structures, many public companies who, according to SEC requirements, must disclose pay packages may find themselves pressured to reduce variable and incentive compensation giving top executives an excuse to consider other job offers or investigate positions at smaller, private companies.
With the focus on executive compensation, this is a time that all companies, in every situation and industry should take the time to review their executive compensation and rewards program to ensure that these programs are in fact aligned with business goals. Recruiting or retaining top talent will only help a company if the reward programs motivate the right behaviors. Contact us for more information.