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:
- The i4cp Coronavirus Employer Resource Center - new research and next practices to help address the COVID-19 pandemic