Somehow we suspect that reduction equity-based compensation will result in bigger pay packages, and that reducing the equity component is as much a reflection of CEOs’ concerns that they won’t be able to benefit from the overall market growth that is the basis for as much as 70 percent of the gains in stock-based plans as it is about improving the balance sheet. Once again, this is why we believe the only credible stock-based compensation is indexed to the peer group or the market as a whole.
Companies looking for ways to cut costs and improve efficiency amid growing fears of an impending recession are increasingly reducing stock- and incentive-based pay structures.
As rounds of massive layoffs continue to roil major U.S. companies, finance chiefs are finding that compensation reductions are an easy way to trim costs as it becomes harder to hit earnings targets, according to The Wall Street Journal. Among the strategies CFOs can employ are reducing eligibility for stock-based pay to include only top executives rather than vice presidents and senior managers, or writing in certain provisions to compensation plans that reduce the overall expense.Agenda – Companies Are Slashing Equity-Based Comp, Bonuses as Economic Fears Persist