However, if a company’s share price were to eventually rebound to levels experienced prior to the economic downturn, the gains realized by the executives may actually be greater than the grants given in previous years. This is a complex issue, and companies need to carefully examine the value of equity compensation and how to best deliver it.
New York, NY (PRWEB) March 12, 2009
In a survey released today by Buck Consultants, most companies report that they will not be delivering the same equity values to their executives in 2009 -- a consequence of decreasing stock prices resulting from the current economic downturn.
The survey, “Taking the Pulse of Equity Compensation,” examines measures companies have recently taken or are planning to implement in 2009, with respect to equity compensation programs and executive pay. The survey includes responses from 73 U.S. organizations, with 90 percent of the participants representing publicly traded companies.
“These reductions in value at the time of the grant are occurring because it is very difficult for most companies to increase the number of options or shares granted to offset the decline in each share’s value,” said Buck Consultants compensation principal Larry Schumer. “However, if a company’s share price were to eventually rebound to levels experienced prior to the economic downturn, the gains realized by the executives may actually be greater than the grants given in previous years. This is a complex issue, and companies need to carefully examine the value of equity compensation and how to best deliver it.”
The survey results also indicate that 52 percent of respondents said there was potential for no increases in executive base salary in 2009.
Other significant findings include:
· Forty-three percent of respondents expect to decrease participation in stock grant programs; more than half of companies cite significant drop in share price as their reason for this change.
· Thirty-one percent of respondents expect to somewhat increase the number of options or shares to those receiving grants in 2009, although very few plan to fully restore last year’s value.
· Changes vary significantly based on equity compensation practices. For those issuing equity compensation based on number of shares, 60 percent anticipate no change in awards. For those issuing equity compensation on a dollar-value basis, only 30 percent expect no changes in awards.
· Forty-five percent of respondents are considering a change in equity compensation mix. Twenty-nine percent will increase their use of shares, and decrease use of options -– likely due to negative employee perceptions of options since a large majority of existing grants are underwater. Sixteen percent of respondents will increase their use of options, and decrease use of shares -– creating the possibility of delivering more future value from the increased number of options granted.
Buck Consultants, an ACS company, is a leader in human resource and benefits consulting with more than 1,500 professionals worldwide. Founded in 1916 to advise clients in establishing and funding some of the nation’s first public and private retirement programs, Buck is an innovator in the areas of retirement benefits, health and wellness programs, human capital management, compensation, and employee communication. News and other information about Buck Consultants are available at http://www.buckconsultants.com. Buck is an independent subsidiary of Affiliated Computer Services, Inc.
ACS, a global FORTUNE 500 company with approximately 70,000 people supporting client operations reaching more than 100 countries, provides business process outsourcing and information technology solutions to world-class commercial and government clients. The company's Class A common stock trades on the New York Stock Exchange under the symbol "ACS." Learn more about ACS at http://www.acs-inc.com.
The “Taking the Pulse of Equity Compensation” report is available to the media by contacting Ed Gadowski at 201-902-2825. It is available to other interested parties at no cost from Buck’s Global Survey Resources, 500 Plaza Drive, Secaucus, NJ, 07096-1533. Telephone 1-800-887-0509. It also can be ordered online at http://www.bucksurveys.com.
Buck Consultants, LLC
edward.gadowski (at) buckconsultants.com
Boasberg Wheeler Communications
shague (at) bwcom.com
This press release was distributed through eMediawire by Human Resources Marketer (HR Marketer: http://www.HRmarketer.com) on behalf of the company listed above.