Compensation management and the c-suite during the Great Recession

by on June 30, 2009 · 0 Comment POSTED IN: HR Info Center

Compensation management for executives needs to reflect the corporate climate, especially in hard times

We hear about the kind of upside and the downside of the economy. In some cases, people are making tough decisions about compensation management, freezing pay or reducing salaries, in some cases, taking $1. But we’re also still hearing about excesses withexecutive compensation management as well.

Many companies are working in new areas like salary freezes or reductions. They are asking questions like: Is there an impact on the use of equity? We’ve heard a little bit about callback(salary givebacks) provisions and certainly see that in the newspapers as well.

TARP and the AIG mess and have dramatically changed executive compensation management. So we’ll talk about looking at the limits imposed by the government or by the board on how companies are dealing with those issues.

And then finally, to shift gears a little bit and talk about sales compensation and look at if from an HR perspective, in terms of how many HR people are being involved in sales compensation. Should they be getting involved? And what can HR do to help drive the business of an organization forward through sales compensation?

Executive compensation management and salary freeze
As we jump right in and look at how many companies have experienced salary freezes or reductions, certainly as I said, a number of organizations have done this. We’re reading about it in the paper on a regular basis.

In fact, a recent report showed that 40 companies since June of 2008 and that’s actually through the end of ’08, we’re coming up on proxy season so we’ll see we anticipate that number will continue to increase. But we’ll see how that comes up to the proxy season.

As you can see, most of those cuts have kind of accelerated through November and December. So it’ll be interesting to see going forward if that trend continues to go up. There is certainly some anecdotal evidence just starting to come out now that talks about the recession starting to trend in the right direction. So we’ll see how that impacts in the short-term through the end of the first quarter as well as looking forward.

Edited remarks from the Rapid Learning Institute webinar: “Executive Compensation Trends: New Benchmarks & Changing Regulations” by Edward Rataj and Kevin Nussbaum

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