In response to the rapidly developing coronavirus
outbreak and its unprecedented impact to business and employers, i4cp has launched a series of weekly standing calls specific to Total Rewards leadership roles.
Total rewards leaders from companies such as Microsoft, McKinstry, the
Federal Reserve Board and many more joined special Q&A guest Gregor Teusch,
global head of total rewards at Nikola Motor Co., on i4cp’s Jun 20, 2020 Total
Rewards Action – COVID-19 Response Call to discuss COVID-19’s impact on
executive compensation. Some highlights:
Executive pay cuts is one way that organizations
are helping sustain themselves in the midst of the coronavirus pandemic.
Today’s call highlighted a recent A.J. Gallagher analysis which found that, 143
of the 151 reporting compensation adjustments in approximately the first month
of the pandemic reported pay reductions for the CEO. The median salary
reduction for CEOs is 50%, according to A.J. Gallagher.
CEO and executive pay cuts are still mostly
limited to specific sectors, however. Nearly half (43%) of the companies
included in the aforementioned A.J. Gallagher analysis are in the retail and
consumer sector, which includes airlines, trucking companies, hotel chains,
restaurants and shipping companies, in addition to typical retail companies.
Today’s instant poll suggested as much, with the largest number of participants
(36%) saying COVID-19 has not impacted executive compensation practices at
their organization. Another 25% said that the coronavirus pandemic has affected
executive compensation at their companies to a low extent. Just 17% selected
“high extent,” with the same number of respondents choosing “moderate extent.”
The pandemic has offered an opportunity to
rethink and revamp compensation practices. Today’s guest speaker, Gregor
Teusch, global head of total rewards at Nikola Motor Co., touched on this topic
during the Q&A portion of today’s call. For example, COVID-19 is prompting
many organizations to reconsider what constitutes effective leadership—placing
more emphasis on qualities like empathy, for instance. As such, compensation
leaders at some companies are also rethinking incentive plan design, and are
putting more thought into whether the organization is rewarding the right
behaviors in its leadership, says Teusch.
In addition to this recording, please see these resources: