Global Recession Hit US Salaries Hardest and Accelerated Equity Program Changes at Technology Companies, Says Aon Consulting's R
15 October 2009 - 3:00AM
PR Newswire (US)
SAN JOSE, Calif., Oct. 14 /PRNewswire-FirstCall/ -- Technology
companies in the United States have experienced greater salary
freezes than other nations, according to Aon Consulting's Radford,
a leading provider of compensation intelligence to the technology
and life sciences industries. These U.S. organizations also have
seen significant shifts in equity compensation, as underwater stock
options and exchange programs soared, and companies continue to
incorporate restricted stock into their programs in lieu of
options. (Logo:
http://www.newscom.com/cgi-bin/prnh/20041215/CGW049LOGO) According
to findings by Radford, U.S. technology companies have been forced
by the recession to use a multitude of tactics to control costs,
including salary freezes (68 percent); layoffs (62 percent);
mandatory time-off (30 percent); and suspending 401(k) matches (17
percent). "Although the entire world has felt the impact of the
recession, it has not had an equal impact to all. The U.S. does not
have the same employment restrictions and rules that the rest of
the world has, therefore it took a harder hit on the salary side to
control costs," said John Radford, senior vice president, Radford.
"Other economies, such as India and China, will continue to grow
and invest in their own economies, since stagnation can only serve
to set them back further after years of personal, social and
business advancement." Radford data also reveals that the "jobless
recovery" continues worldwide, as 58 percent of companies globally
indicate hiring levels will remain flat or decrease over the next
12 months, with cautious headcount growth. Moreover, the need for
U.S. technology companies to control cash during the last 12 months
has led to material changes in equity strategies and plans, with
more technology companies now relying on restricted stock or
restricted stock units rather than stock options. Issuing
restricted stock alone or in combination with options has become
the majority practice at most employee levels in the technology
market. Radford found in their recent research that 68 percent of
companies were predominantly emphasizing restricted stock in their
programs, up 12 percent from last year. In 2008, 59 percent of
small and emerging technology companies were option-centric as
compared to 47 percent this year, according to Radford's data.
"Historically, we have seen fast-growth companies emphasize stock
options to conserve cash and align employees with value created for
shareholders; a strong ownership culture has been a core feature of
these entrepreneurial companies and cultures to drive innovation,"
said Linda E. Amuso, president, Radford. "But, we are seeing that
small companies have also moved to restricted stock as a key part
of their equity strategies in order to compete for talent, improve
the retention of these plans, and to 'buy talent out' currently
holding restricted shares. It also is a clear indicator that,
across the industry, underwater options are pervasive and equity
compensation has required a re-examination." As for cash incentive
plans and the probability of payout in 2010 (based on 2009
performance), 35 percent of U.S. technology organizations expect
payouts below target for 2009, with 6 percent not expecting any
payout at all due to the challenging environment this year. "As the
market continues to pick up and hiring returns, companies will be
under pressure to issue merit increases in addition to providing
100 percent funding in their incentive plans in 2010, as a way to
reengage employees and to reestablish the variable pay nature of
these plans, while still controlling fixed costs and salaries,"
said Amuso. Data cited in this press release comes from various
Radford surveys, research conducted by the Radford Analytic
Services team, as well as Radford's Quarterly Summary of Industry
Trends and the International Semi-Annual Summary of Industry Trends
reports. This data was featured in Radford's "Mid-Year Technology
Compensation Update" webcast for clients. Information on each of
these is listed below. About the Studies The Quarterly Summary of
Industry Trends report is a quarterly report available to survey
participants. The Q3 technology edition included 540 participating
companies. The International Semi-Annual Summary of Industry Trends
report is published twice a year and is available to survey
participants. The October edition included 327 participating
companies. About the Webcast With more than 1,000 registrants, the
September "Mid-Year Technology Compensation Update" webcast
explored the latest trends in compensation, with data from the most
updated Radford Benchmark and Executive Surveys; Quarterly Summary
of Industry Trends report; and International Semi-Annual Summary of
Industry Trends report; with a special focus on the specific equity
plan changes that have been implemented over the last 12 months;
and a global compensation update. The webcast featured President
Linda E. Amuso and Senior Vice President John Radford. About
Radford For more than 30 years, Radford has provided compensation
market intelligence to the technology and life sciences industries.
Global survey databases, which include 3.5 million incumbents,
offer current, reliable data to 2,000+ clients. Leveraging Radford
survey data, our thought-leading global Radford Consulting team
creates tailored solutions for the toughest global business and
compensation challenges facing companies at all stages of
development. In addition to our consulting team, we also offer
equity valuation assistance via Radford Valuation Services, and
leading-edge market analyses and survey services with Radford
Analytic Services. Radford's suite of surveys for 2010 include the
Global Technology, Life Sciences, and Sales Surveys, as well as the
US Benefits Survey. About Aon Consulting Aon Consulting is among
the top global human capital consulting firms, with 2008 revenues
of $1.358 billion and more than 6,300 professionals in 229 offices
worldwide. Aon Consulting works with organizations to improve
business performance and shape the workplace of the future through
employee benefits, talent management and rewards strategies and
solutions. Aon Consulting was named the best employee benefit
consulting firm by the readers of Business Insurance magazine in
2006, 2007 and 2008. For more information on Aon, please visit
http://www.aon.mediaroom.com/. About Aon Aon Corporation (NYSE:AOC)
is the leading global provider of risk management services,
insurance and reinsurance brokerage, and human capital consulting.
Through its more than 37,000 colleagues worldwide, Aon readily
delivers distinctive client value via innovative and effective risk
management and workforce productivity solutions. Aon's
industry-leading global resources and technical expertise are
delivered locally through more than 500 offices in more than 120
countries. Named the world's best broker by Euromoney magazine's
2008 and 2009 Insurance Survey, Aon also ranked highest on Business
Insurance's listing of the world's largest insurance brokers based
on commercial retail, wholesale, reinsurance and personal lines
brokerage revenues in 2008. A.M. Best deemed Aon the number one
insurance broker based on brokerage revenues in 2007 and 2008, and
Aon was voted best insurance intermediary, best reinsurance
intermediary and best employee benefits consulting firm in 2007 and
2008 by the readers of Business Insurance. For more information on
Aon, log onto http://www.aon.com/. For more information, contact:
Fabiola A. Price, +1 (415) 486-7133, Kelly St. Denis, +1 (408)
321-2584, http://www.newscom.com/cgi-bin/prnh/20041215/CGW049LOGO
http://photoarchive.ap.org/ DATASOURCE: Aon Corporation CONTACT:
Fabiola A. Price, +1-415-486-7133, , Kelly St. Denis,
+1-408-321-2584, Web Site: http://www.aon.com/
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