MSNBC.com: AIG Flap Heartens Critics of High Pay - Critics hope backlash will pressure other companies to curb payouts

MSNBC.com: AIG Flap Heartens Critics of High Pay – Critics hope backlash will pressure other companies to curb payouts

March 20 2009

Even those who favor leaving pay practices in the hands of the private sector concede that this may be a year of relative restraint.

Steven Hall, managing partner of the executive compensation consulting firm Steven Hall & Partners, said there are several reasons pay packages will be lower this year.  For one thing, companies that may receive government aid in the future are going to be concerned that they will either be forced to rescind the money or be lambasted for the payouts, he said.  For another, those that aren’t receiving government aid will worry about public outcry — and shareholder resentment — over rewarding executives handsomely in a year when most companies’ share prices have fallen sharply, many have reported disappointing earnings and layoffs are common place.  “We know that the world is reacting negatively to those things,” Hall said.

A tough business climate also likely made it harder for executives to meet their goals for this year, which could crimp pay that was based on meeting certain performance targets.  Still, Hall doesn’t expect the cutbacks to last once the economy starts to recover and business starts to rebound.  “For general industry, I think pay will come back,” he said.  On Wall Street, however, Hall expects that compensation will not return to the levels it hit before the financial crisis altered the industry, perhaps for good.  “Wall Street bonuses are going to be lower than they were because the business is different,” Hall said.  “The world has changed for them.”