Survey: Executive bonuses might shrink with economy
The Business Journal of the Greater Triad Area
Annual bonuses and stock-based awards may dry up with the economy, according to a survey released Wednesday by Pearl Meyer & Partners.
Nearly nine out of 10 respondents say market turmoil will affect corporate executive compensation over the next six months, according to the New York compensation consultancy, which surveyed 410 board members, executives and human resources professionals earlier this month for its “Executive Pay in the New Economy” online survey.
More than half say they anticipate a decline in stock options and restricted share grants that comprise much of executive compensation. Twenty percent expect to revise their companies’ severance packages or change-in-control arrangements over the next year,
In addition to declines in performance-based pay, respondents also indicated they expect salary growth to be lower next year, and nearly 18 percent were “strongly considering” a salary freeze.
“It’s appropriate that variable components of pay such as annual bonus awards and stock grants are being put at risk in executive pay programs — that is how pay for performance is supposed to work,” said David Swinford, president and chief executive officer of Pearl Meyer & Partners. “The open question is whether the reductions will be in line with the expectations of shareholders who are feeling the pain in their own portfolios.”
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