Lazard expects to squeeze out more than $170 million in costs by reducing compensation to current employees and through the expiration of guaranteed contracts.

He and some colleagues questioned whether Salomon could severely reduce compensation while continuing to support sufficiently its investment banking businesses and remain a full-service firm.

"Our target is to reduce total compensation by 10 percent," Mr. Tully said.

But the firm said that if such traders lose money in one year, those losses will not carry over to reduce compensation from profits in following years.

But losses sustained in one year will not carry over to reduce compensation in the future.

"You won't hear any of this discussion of reducing compensation once the business turns the corner."

The idea isn't to reduce collective compensation for players; the idea is to distribute the money more evenly and fairly.

Mr. Shipley said companies would have to reduce compensation by 6 to 8 percent to make up for the revenue erosion that deflation is causing.

The new provision permits teams and players to mutually reduce or eliminate guaranteed compensation if a player was waived.

The strict pay plan was also being widely watched on Wall Street, where several firms are trying to reduce compensation to cope with tougher business conditions.