Recession Could Squelch Executive Bonuses

Jan. 13, 2005
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, ...
Compiled ByDeborah 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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