The Good People Will Go Elsewhere

The other day in response to the new that the government "Pay Czar" was slashing salaries for top executives at companies taken over by Obama I wrote this:

Most of these executives are pretty well off, and with these changes coming down, my guess is a lot of them will flip the bird to Obama and leave. These companies, already in big trouble, will lose some of their top talent and will have a very difficult time replacing them with anybody worth the money. This will likely just accelerate the demise of those firms.

Well, let's see what's actually happening:

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.

The administration had tasked Kenneth Feinberg, the Treasury Department’s special master on compensation, to evaluate the pay packages of 25 of the most highly compensated executives at each of seven firms receiving exceptionally large amounts of taxpayer assistance.

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.

“There’s no question people have left because of uncertainty of our ability to pay,” said an executive at one of the affected firms. “It’s a highly competitive market out there.”

People who are good enough to reach these lofty levels in business are not stupid and they're not going to be patsies for the government either. They'll just leave, and that's what they're doing.

This means the next crop of executives, assuming they'll be able to find any, will be less skilled and less talented and the firm's slide into oblivion will accelerate.