Posted on 20 Oct 2009
More than half of U.S. companies are reducing bonuses, and nearly half are scaling back on raises in an effort to cut costs in a tough recession, according to research released on Monday.
A third of companies are cutting back on employee health care benefits, and a third also are cutting back on stock options and other equity-based compensation to trim costs, according to a survey of chief financial officers and senior comptrollers by Grant Thornton, an accounting firm.
Cutting back on bonuses was cited by 55 percent, and 42 percent are giving smaller raises, it said.
The issue of bonuses, compensation and raises has become particularly thorny in the U.S. recession, as the public has grown critical of top executives taking home huge sums as their companies fail, their employees lose their jobs or their firm enjoys taxpayer-funded government bailouts.
Last spring, a similar Grant Thornton study that asked companies where they were cutting costs found 65 percent were not giving raises and 47 percent were not handing out bonuses.
In both studies, a quarter of the executives said their companies cut matches to employee 401(k) retirement funds.
Asked in the recent study what pricing pressures are most concerning, 77 percent said employee benefits such as health care and pensions, distantly followed by energy costs at 35 percent and raw materials at 30 percent.
In a ray of optimism about the economy, a third of the executives said they are less worried about their company's ability to continue as an ongoing concern than they were a year ago, and just a quarter said they were more concerned.
The balance of 45 percent felt "about the same," it said.
The biannual nationwide online survey was conducted Sept. 21 through Oct. 2, 2009, among 846 U.S. chief financial officers and senior comptrollers.
No statistical margin of error was calculated.