Recession Could Squelch Executive Bonuses

Compiled By Deborah Austin The new year may prove not so happy for executive bonuses. Compared with levels paid in 2001 for year-2000 performance, 40% of companies expect to substantially slash 2002's executive bonuses for year-2001 performance, suggests new research from management/human-resource consulting firm Towers Perrin, New York. Thirty percent plan to cut overall bonus levels by more than one-quarter versus last year, and 10% will pay no bonuses at all. Forty-one percent will pay within 25% (plus or minus) of last year. While these figures represent companies' entire executive bonus plans, more are trimming bonuses for selected executives -- even the whole top executive team -- says Allen Jackson, principal in charge of data/technology for Towers Perrin's executive compensation practice. In fact, one-fourth of surveyed firms are considering overhauls of bonus plan design or calibration. Recent Towers Perrin research shows recession-spurred cost-cutting measures forcing nearly half of surveyed companies to target pay and bonus programs for additional savings, says Jackson.

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