Eli Lilly Doesn’t Plan to Claw Back Past Pay From Former CFO

Growing societal awareness around inappropriate behavior in recent years, accelerated by the #MeToo movement, is forcing companies to be more transparent in cases of executive misconduct, said Alan Johnson, managing director at Johnson Associates Inc., a compensation consulting firm. “Historically, companies either did nothing or allowed people to leave quietly,” Mr. Johnson said. “That appears no longer possible,” he said.

The Wall Street Journal / February 10, 2021


Clawbacks Are Hard, So Companies Try Postponing Pay Instead

Critics warn that deferring more pay, with risk of forfeiture, could discourage executives from reporting misconduct and make it too easy for companies to rescind pay.

“If we make these penalties even more severe, are more people going to come forward or fewer?” said Alan Johnson, managing director of Johnson Associates, a financial-services industry pay-consulting firm. “Clawbacks are time-consuming and expensive—but if you’re taking back people’s pay, I think it should be.”

The Wall Street Journal / February 7, 2021


Employees Watching Exec Pay, Consultants Say

“This is not a year for a lot of gobbledygook and lawyer-talk,” says Alan Johnson, managing partner at Johnson Associates, a compensation consulting firm that mainly works with financial services companies. “This would be a year for straightforwardness. They may disagree [about compensation decisions], but they won’t think you were hiding something or weren’t straightforward about what you were doing.”

Johnson says that while most of his clients have been largely insulated from the financial impact of the pandemic, he has emphasized with clients that it’s not the year to be “exaggerated” in pay for executives. Outside financial services, he says, it may be more complicated.

“I think firms need to be very sensitive to the optics of compensation. If you’ve laid off thousands of employees or had deaths in your workforce, to exaggerate executive pay would be [viewed negatively] this year,” he says.

Agenda / February 1, 2021


Junior Bankers Feel Left Behind in COVID-era Banking Boom

“The fear that clients have is that they may be more susceptible to leaving now simply because they don’t have the cultural norms, they don’t have the personal loyalty or allegiances to people,” said Alan Johnson, head of compensation consulting firm Johnson Associates Inc.

Wall Street banks were already struggling to attract and retain young talent before the pandemic.

Investment firms and technology companies were luring young staff with comparable pay and shorter hours. Plus, Wall Street’s reputation suffered from the 2007-2009 financial crisis and a spate of junior-staffer deaths attributed to grueling schedules.

Banks rolled out policies to boost morale, including limits on how many hours analysts could work. But negative experiences during the pandemic may harm retention in an industry that sees about 85% of analysts leave investment banks within two years, according to recruiting firms.

“On the turnover side, March or April will begin to tell the tale,” Johnson said. “I have told (clients) they’re going to see an unusual amount.”

Reuters / January 27, 2021


For Bankers, 2020 Was a Bad Year to Have a Good Year

Wall Street banks have had a decent crisis so far. That is unlikely to translate to bumper bonus payments for bankers and traders, as chief executives and boards grapple with the optics of big payouts amid economic hardship on Main Street…

According to New York-based compensation consulting firm Johnson Associates, banking industry bonuses are likely to be flat overall compared with 2019 but with wide variations, with lower payouts in retail banking and higher payouts for equity and debt traders, salespeople and underwriters, and “unusual scrutiny” of pay for chief executive officers.

“Investment bankers on average are going to get paid more,” said Alan Johnson, head of the consulting firm. “It’s uncomfortable in the middle of a pandemic. Some of these people are not beloved to begin with and then we’re going to have stories about people going out and buying fancy cars, and fancy apartments, and that’s going to make a lot of people angry.”

The Wall Street Journal / January 7, 2021


Wall Street Bonuses Likely to be Smaller This Year: Johnson Associates Analysis

“The pandemic is wreaking havoc on many parts of the U.S. economy this year, and the financial services industry is no exception,” said Alan Johnson, managing director of Johnson Associates…

Even with an optimistic vaccine view, the pandemic will continue to weigh on the economy in 2021, but likely to a lesser degree than in 2020, the firm projects…

“For 2021, we expect some stabilization with early projections for modest salary increases, and flat to slightly increased incentives,” he said.

Seeking Alpha / November 15, 2020