BONUSES
Sharp drop in bonus payments for managers
Bonuses awarded to UK managers dropped markedly over the last year, but they are not yet out, reveals the latest Executive Compensation Review by Incomes Data Services.
IDS reckons that the figures show that bonuses remain very much an integral part of current reward packages. As Steve Tatton, Editor of Executive Compensation Review, explains: “Although bonuses have come under fire, with criticism linking incentive schemes to the use of high-risk, short-termist business strategies, employers continue to view performance-related pay as a valuable reward tool.”
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Key research results
According to the IDS analysis:
Board directors were awarded bonuses worth on average 30% of their basic annual salary in the year to April 2009, down a quarter from the 40% recorded in the previous 12 months.
Senior managers saw the sharpest reduction in their bonuses, which fell by more than a third from 20% of their salary to 13%.
Bonuses of professional and technical staff also dropped by around a third from 8% to 5% of their salary.
Junior and middle management, on the other hand, saw their bonuses decrease by 22% from 10% to 8% of their salary.
Bonuses are generally paid out based on past performance, so many of the bonuses awarded in the past year would have been based on company and individual performances before the credit crunch began to bite. Tatton says: “As the economy has continued to decline, or at best stagnate, and with the majority of bonus payments linked to company performance many employers may have to delay, or further reduce bonus payments this year.”
A final word
“Up until last year bonuses were still holding up but the recession seems to have fed through. Senior management and professional staff were hit hardest and lost approximately a third of the value of their annual incentive payments. But despite bonus payments falling overall, board members and senior managers are still receiving a substantial percentage of their basic salary.” - Steve Tatton, Editor of Executive Compensation Review.
Want to know more?
IDS Executive Compensation Review (ECR) is a monthly journal providing information on all aspects of pay and practice for managers and professionals. A subscription to ECR also gives you two research reports during the year: Managers' Benchmark Pay Report and Pay and Progression for Graduates.
Availability: To subscribe contact IDS, tel: 020 7429 6800.
Incomes Data Services provides information and research on employment issues via a range of publications for employers, trade unions, government departments and other agencies. To find out more visit www.incomesdata.co.uk.