Executives expect 10% cut in year-end bonuses

December 29th, 2008, 6:30 am · 5 Comments · posted by Mary Ann Milbourn

This year may be remembered as the year executive pay was cut — especially bonuses — and it may go on for some time.

An ExecuNet survey of 113 top executives, vice presidents and people who report directly to them showed 61% are expecting year-end bonuses — but their checks will be 10% smaller. Since bonuses account for 19% of their total compensation, the cut won’t go unnoticed.

“While much of the public’s focus has remained on Wall Street’s pay packages, companies across all industries are cutting bonuses,” say Mark Anderson, ExecuNet president. “Heading into 2009, executive compensation packages can be expected to contract until the outlook for corporate profit growth rebounds.”

Many companies are struggling with bonuses, or the lack of them. Check out these recent posts:

A separate survey found most small businesses have canceled their 2008 bonuses.
While some companies buck the bonus-canceling trend.
Other studies question the value of bonuses tied to a time of year.
Here are some tips if your business can’t afford cash bonuses.

The survey listed these factors and the weight most companies give them in determining year-end bonuses:

Corporate performance: 51%
Individual performance: 24%
Department/team performance: 23%
Tenure: 2%

Interesting note: Given a choice between a year-end bonus and more time off from work, 75% of those surveyed chose the bonus.

Which would you prefer?

Would you rather have a year-end cash bonus or time off?

Other news on bonuses …

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PG says:

December 29, 2008 at 8:57 am

No idea what these executives were smoking, but I can say that most companies are having problems hitting threshold performance for 2008, and threshold performance usually equates to very partial funding for bonus programs (e.g. 50% is customary). 10% is a total BS figure.

ocobserver says:

December 29, 2008 at 9:23 am

10%?

Unless a company is making hand over fist profits, as most aren’t right now, the execs shouldn’t get any bonuses at all!

A bonus, by definition, is supposed to be paid for doing exceptional work which resulted in strong company earnings.

Show me a company that increases a line worker’s pay by 20% when times are bad.

10yrsafter says:

December 29, 2008 at 9:32 am

Wah, wah, wah……cry me a river!
They are lucky to have a job.
Too many people work very hard with low pay and tons are out of work. These Executives can afford a 10% cut in Bonus’.
I say make them take a 25% cut in pay so others can keep their jobs, if need be. Make them work harder to earn their pay and make their companies profit even better in 2009. Lets get the ball rolling by starting from the top.

MAXXX says:

December 30, 2008 at 7:23 am

Why are any of these idiots expecting let alone getting any bonuses?People are getting fired or havimg their pay cut and these elites are getting bonuses?I hear the peasents grumbling!!!

December 30, 2008 at 7:24 am

ya i know i spelled it wrong.

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