11% of firms paying above-target bonuses

BUSINESS
is bad all around but some 11 per cent of companies polled in January
in Singapore - mostly those in the service and agricultural-related
industries - still expect to dish out higher-than-targeted bonuses to
top executives this year.

However, the bonuses are likely to come out of a smaller pool,
according to Lee Shiau Fei, a senior executive consultant at the
Singapore office of the US-based Hewitt Associates, the human resource
services provider that did the poll.

In
fact, the overall bonus pool of companies in the Asia-Pacific region is
expected to shrink this year as the global recession hits home - and
bonus payouts will be fewer and smaller.

Hewitt polled 312 employers across a broad spectrum of industries in 12 countries in the region.

Nearly three in four - 72 per cent - of the companies polled in
Singapore expect to give smaller bonuses to top executives - those
reporting directly to the chief executive - this year.

And 17 per cent do not intend to pay out any bonus at all.

‘When compared to the rest of Asia-Pacific, responses by
organisations in Singapore appear to be quite conservative,’ Hewitt
says. ‘The prevalence for not providing a bonus is greater for
Singapore than in other markets in Asia-Pacific.’

While only 11 per cent polled in Singapore indicated that they plan
to dish out higher-than-targeted bonus, the figure for the rest of the
region is 22 per cent.

‘The uncertain impact of the global recession is the key concern of
most organisations,’ says Ms Lee, who is Hewitt’s compensation
consultant for South-east Asia.

‘Smaller bonus payouts for top management teams this year shows that
employers in Singapore are willing to make short-term sacrifices during
this time of crisis for longer-term business sustainability.’

Singapore companies are also more cautious than their counterparts
in the Asia-Pacific when it comes to merit increases for top executives.

‘Almost half of the organisations surveyed indicated that they may
not provide merit increases to their top executives this year,’ Hewitt
says. ‘Of those providing increases, the median expected amount is 3
per cent.’

This is the lowest in the region. The highest is 8 per cent - in India.

Long-term incentives in the form of equity compensation, which make
up a big chunk of top executives’ compensation, are also tipped to
decline - thanks to lower equity valuations and poor corporate
performances.

‘Equity compensation is expected to be under severe pressure given the current bear market conditions,’ says Ms Lee.

‘Such compensation vehicles lose their attractiveness to provide the desired incentive value to recipients.’

The Hewitt poll shows that a third of the companies polled have more
than 75 per cent of their outstanding stock options currently
underwater.

via Business Times