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Securities and Exchange Commission Chairman Harvey Pitt’s image problems are well known. The one-year anniversary of his August 2001 appointment will likely invite yet another round of harsh assessments of Pitt’s post-Enron performance. But Pitt can at least count on his agency’s attorneys to rally in unison to support their leader, right? Not exactly. Many SEC lawyers are lining up opposite Pitt and the agency’s leadership to combat the SEC’s recently revamped salary structure. After Congress granted the agency long-awaited pay parity with the Federal Reserve and other financial industry regulators earlier this year, the SEC created 20 compensation levels, with as many as 31 steps in each (up from roughly 15 pay grades and 10 steps). The agency’s plan raised base salaries by 6 percent, granted approximately 6 percent more to managers, and established a merit pay program. Although accruing since May, the higher amounts should finally make August’s paychecks. The National Treasury Employees Union, which represents SEC staffers, argues that the agency’s leaders created the new salary scheme without union input, and is unhappy with the outcome. “Pitt hijacked pay parity for the managers,” says Michael Clampitt, an attorney in the SEC’s division of corporation finance and president of the agency’s NTEU chapter. Clampitt and NTEU President Colleen Kelly claim that once the initial 6 percent raises are paid, the managers receive a disproportionate amount of the remaining $25 million appropriated to the SEC by Congress to fund the 2002 pay increases. “They weren’t interested in other ideas the NTEU had,” Kelly says. “Management claims they never said take it or leave it, but that’s what my team heard.” More than a third of the NTEU’s roughly 2,000 members at the SEC are lawyers — “not the usual clientele” of a union, says SEC spokesman Brian Gross. Division heads and those with management roles are ineligible to join. The SEC cites longtime recruiting and retention problems as the reasons for imposing the new salary structure in May. A March SEC report found that more than 40 percent of its staff left during the last four years, including 600 attorneys. The report noted that a second-year SEC lawyer making the agency’s preplan $72,000 maximum might earn 36 percent less than a comparable Federal Deposit Insurance Corp. attorney. The union charges that an agency devoted to disclosure won’t provide it with enough information to analyze how much money is going to nonbargaining unit supervisors and where the SEC’s attrition problems are gravest. Clampitt doesn’t think retention is an issue in the cushy management ranks. “We’re not losing any managers,” he says. “You couldn’t get them out of here with a tractor-trailer.” Clampitt, who has been at the agency since 1990, says management overlap and complacency at the SEC exceed the FBI’s well-publicized problems. “We’ve got six managers for everybody doing some work,” he says. “The Soviets had nothing over the apparatchiks in this place.” Clampitt says it’s appropriate to pay trial lawyers more money than their managers, who may work fewer hours. Both sides are awaiting approval from Congress for the $76 million required to fund the 2003 salary increases. While pursuing funds for 2002, Pitt told House and Senate committee members that “pay parity has been and remains my highest budget priority.” After learning in May that the pay plan would be put into effect, the union organized a lunch hour rally outside the agency’s Fifth Street headquarters to publicize delivery to Pitt of a nearly 1,000-signature petition seeking more money for bargaining unit employees and arbitration of the disputed pay parity issues. The gathering drew about 200 SEC personnel, many toting placards decrying their “pittance.” “This is a happy battle,” concludes agency spokesman Gross. “In the end, people are going to get more money no matter what, and that’s a good thing.” But even securing a salary increase for his staffers can’t seem to buy Pitt much love.

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