Executive Flight

Earlier I argued that the order resetting executive compensation for the companies accepting bailout money from the US government would not impede the ability of the companies to retain their top executives because it was a predictable outcome once the companies made the decision to seek help and that any executives that would have left because of the order should have already left. Turns out that part of the story is correct. From the Washington Post today:

Even before the Obama administration formally tightened executive compensation at bailed-out companies, the prospect of pay cuts had led some top employees to depart.

But Thursday, he ruled only on slightly more than three quarters of the pay packages that were to be under his purview. The balance reflected executives who have left since he began his work in June or will be gone by the end of the year.

Many executives were driven away by the uncertainty of working for companies closely overseen by Washington, opting instead for firms not under the microscope, including competitors that have already returned the bailout funds to the government, according to executives and supervisors at the companies.

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