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Compensation in Management and the NHL


Peter Chiarelli confirmed in a presser with Edmonton media that the Edmonton Oilers would be providing compensation to the San Jose Sharks as a result of the hiring of new coach Todd McLellan. That was followed by confirmation that Edmonton would also be on the hook for compensation to the Boston Bruins for the hiring of GM Chiarelli.

With the news that Mike Babcock is now running the team in Toronto, it begs the question, how important is this concept of compensation in the NHL when hiring for management staff in key positions?

What does this mean for the Oilers?...

The Edmonton Oilers are a great example of what kind of damage this executive compensation system can do. The premise behind the idea is sound -- if a team hires an executive with key information, the team to which that executive is leaving doesn't want a) that executive to leave with said useful information and not be compensated and b) not have spent time and resources training said executive for the purposes of employment elsewhere. I get all that. And, in the case of Mike Babcock, this sort of makes sense. An argument could even be made that McLellans's situation is unique as the Sharks and the then San Jose coach, mutually parted ways.

But where an executive is terminated - as was the case with Peter Chiarelli, the rule lacks logic.

Lower End Executives...

What may be more important, is how it affects the teams taking on the executive and providing compensation. Will it affect their ability to draft well and ice a winning team? If for example, a coach like Todd McLellan wants to bring in his former assistant in San Jose to join him with the Oilers, is that now also a hire that requires further compensation? If so, would the Oilers choose to wait past the date of the NHL draft to make that hire, going outside the time-frame that is considered a window for compensation?

If so, this could get messy in a hurry as coaches in the past were given free-reign to bring in the assistant staff of their choosing. If they bring in current assistants with former teams, the former teams could demand compensation. Should they? No, probably not. Will they? Some will for certain.

For now, it doesn't appear to be an issue, but that's because the rules are unclear. Once the real guidelines start to sneak to the surface, this could become an interesting game of chess. Would a team like Edmonton hope that Todd Nelson catches on with another, different NHL team in an effort to recoup some of the compensation given up in previous hires? Would Edmonton force McLellan to wait on hiring his assistant staff until the window of compensation expires?

For the Oilers, who have just finished hiring a new GM and head coach, all within thirty days, they will lose two picks; either in 2015, 2016 or 2017 (one would have to guess 2016 and 2017 will be the years they will select). The gamble may be worth it, but it may require a full-time staffer just to keep up with the knowledge required to juggle such situations. Edmonton has one full-board in changing their entire management team. From the sounds of things, all executive staff are open to these compensation rules.

Oiler fans don't seem to be concerned at the present time, but perhaps they should be. If Edmonton keeps making moves, picks could be also heading out the door. Or, should the Oilers choose to wait out the compensation period, the coaches will lose some valuable time with the team or scouts as they prepare and do what's needed to be ready for the NHL draft.

I have a feeling, this could be just the beginning of some interesting and potentially confusing times.

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