So what should we make of all this — bonuses hammered, but salaries and stock holding their own, and even getting an uptick? "The days of super excessive pay may be over," said one compensation expert. "But companies still need to incentivize and retain people. They'll come up with packages."
Why the huge drop in discretionary bonuses? A bad economy and increased visibility. Recent SEC rules, for example, require companies to go into detail on their proxy statements about how they calculate compensation for their top executives: What companies does it compare itself to? What information did it look at? A narrative of the process must be provided — a Story of the Pay. And discretionary bonuses are a story not all companies want to tell. Yet companies had to keep their top employees — a point that helps to explain the salary uptick: that 3.8 percent.
In the end, the economy may return back to the good old days, but the process for determining top executive pay likely won't. There will most likely be more rigor and oversight involved in determining executive pay. In the meantime, GC’s need not worry too much, companies will still look for ways to keep their top lawyers and provide healthy compensation – just structured differently.