Quite how much the world changed after Lehman Brothers fell is still up for debate. Perhaps not as much as indicated by a new piece of research by Towers Perrin. This starts with a drawn-out parallel between the demise of Dick Fuld’s bank and the work of sixth-century monk Dionysius Exiguus, whose invention of the BC/AD system, Towers says, came to “define civilization”.

Still, once the long-dead monks are out of the way, the Towers Perrin / Cass research shows that for the select band of firms brave - and strong - enough to undertake M&A post-Lehman, the reward has been stock market out-performance. And it was even better for an elite band able to make more than one acquisition. As I wrote:

“Stock markets rewarded companies such as Johnson & Johnson (JNJ.N) and Cisco (CSCO.O) who were brave enough to make acquisitions in the months after Lehman Brothers’ collapse, a study released on Monday showed.

“Although firms who made purchases worth $100 million or more suffered an average 25.5 percent fall in their stock price, they outperformed the wider market by 6.3 percentage points, the Towers Perrin/Cass Business School research found.”

Read the full story here. Incidentally Towers and rival consultants Watson Wyatt have taken their own advice and are working on an all-stock merger. Wonder who they will tap for merger consulting?

Top Watson Wyatt executives got generous bonuses for fiscal year 2008, with CEO John Haley getting $1.3 million, which was 148.6 percent of the target bonus. 

Haley also recommended annual bonuses ranging from 112.3 percent to 154.2 percent of the target bonus for the other named executives, according to an SEC filing.

Haley’s bonus depended on 11 principal factors, including how well the company met its financial goals for the year. 

For fiscal year 2008, the plan was that revenues would increase by 9.3 percent to $1.6 billion and that earnings would increase by 8.9 percent to $2.90 per share. The actual results: revenues of $1.760 billion and earnings of $3.50 per share.

It will be interesting to see what the company’s executives are paid this year. 

The sector faces challenges as clients continue to cut discretionary spending. And so far this year, its shares are down roughly 23 percent, falling more than 10 percent since its deal to buy Towers Perrin on Sunday.  

Executive compensation is drawing intense scrutiny, with activist shareholders urging the government to get more involved in overseeing multimillion-dollar pay packages received by a growing number of American chief executives.

Watson Wyatt and Towers Perrin executives are excited about their deal to create Towers Watson, but investors are not cheering as much. 

Watson Wyatt’s shares plunged nearly 10 percent in Monday morning trading, as investors woke up to the all-stock deal valued at about $3.5 billion, announced Sunday.

A Citi analyst downgraded the Watson Wyatt, which is publicly held, to “hold” from “buy”, calling the companies’ three-year integration plan a “major risk.” 

Among the concerns: integration and deal costs may lower earnings, and rivals like Hewitt and Mercer could grab people and other opportunities in the interim. 

It will take three years to achieve savings of $80 million through job cuts and the streamlining of overlapping operations. The companies also expect one-time costs of $80 million from the merger and “significant noncash expenses” for the first two years. 

“The merger will create a global leader, but the three-year path to accretion could imply a difficult integration,” Citi analyst Ashwin Shirvaikar wrote in a research note.