A Leaner Year Ahead for Long-Term Compensation

January 20, 2009

It's
that time of year when many senior executives find out how happy their
new year really will be as they learn the amount of their incentive
compensation for last year. For some, it looks like the Grinch stole
more than Christmas. According to a Mercer survey, the impact of the
economy on corporate performance is sending annual incentive payouts
south. Nearly two-thirds of companies (64 percent) are expecting
below-target annual incentive payouts for 2008. However, 29 percent of
respondents may offer some form of a discretionary award to select
employees or possibly all eligible participants in an effort to retain
talent in the tough economic environment.

Substantial changes are afoot in long-term incentive compensation
for '09. According to Bruce Greenblatt, a principal in Mercer's
executive remuneration consulting business, many companies are
anticipating lower values than 2008 -- somewhere between 10 to 30
percent. Some companies that have already announced reductions for this
year say they'll pay below target annual incentive payouts based on
weak 2008 performance, moving away from stock options in favor of other
long-term incentive vehicles and opting for selective retention

more...http://businessfinancemag.com/blogpost/leaner-year-ahead-long-term-compensation-0120