WorldatWork - September 11, 2009
Private Companies Expected to Increase Bonuses and Staff in 2010
Private companies will increase bonuses in 2010 and have budgeted for more new hires, according to a survey report by Syzygy Consulting Group.
“In my discussions with CEO participants there is much optimism for growth in jobs and pay in 2010,” said David Broman, Syzygy’s CEO. “This follows a year when almost everyone – including CEOs – went without pay increases and had bonus pay cancelled altogether. But in 2010 the mantra is grow. Private companies are budgeting for higher bonuses in 2010, some returning to highs last seen in 2007.”
According to Syzygy, 2009 has been a dismal year for employee compensation at private companies, showing the worst year-over-year decrease in total pay since 2001. Brian Andriuzzo, Syzygy’s chief financial officer, reported that “base pay fell on average 6.2% in 2009 and bonus pay dropped more than 60% for rank and file, primarily due to the number of companies that froze salaries and/or eliminated incentive pay. Even stock options grants fell to their lowest level in years, with overall ownership now standing at 15%, a 1% reduction.”
However, not everyone went without, according to Syzygy. “While it is true that the financial backers of private companies are holding the line on pay and employee stock option grants, compensation for independent board members increased significantly, about 25%, telling us that private companies are still willing to pay top dollar for the board guidance needed to succeed,” Broman said.
Key findings:
- Median CEO total cash compensation decreased 11% and CFO total cash compensation declined 19% from 2008.
- Average base salaries decreased by 6% year-over-year.
- Median bonus for a director of engineering fell from $12,683 to $4,311, a decrease of 66%, and the median bonus for a senior development engineer fell from $12,020 to $4,178, a decrease of 65% from 2008.
- Aggregate employee ownership decreased 1%, falling to 15% of outstanding common share equivalents. The median shares available as a percent of outstanding was about 7%.
- CEO stock option holding also declined by 9% in 2009, with the median CEO-non-founder holdings at 4% of the companies they lead. Most of the decrease in executive ownership is the result of dilution from new investments and lower compensatory grants to tenured CEOs and CFOs.
- A CEO-founder generally receives 27% less cash compensation than a non-founder CEO, which is offset by compensatory stock holdings that are 2.5 times greater than their non-founder counterpart.
