Fewer U.S. Companies Offered Executive Perks in 2010

October 21, 2010    

Original Article: Society for Human Resource Management

Since the onset of the economic downturn, organizations across the U.S. have found their executive compensation packages placed under a magnifying glass and scrutinized at every turn. As a result, fewer companies are offering perquisites to their highest ranking employees. According to the Executive Compensation 2010/2011 survey results, 77.6 percent of organizations offer perks to their chief executive officers in 2010—down from 89.8 percent in 2009.

“Perks” are any supplemental reward not tied to performance. Typically, their purpose is to reward a company’s top officers in a way that conveys status or enables them to do their jobs more efficiently—and sometimes both. Crafting packages that attract and reward top talent without crossing into the kinds of gratuitous extravagance that alienate workers and shareholders—or government watchdogs—is a vital HR challenge, especially in a sluggish economic environment.

Of the perks offered to CEOs in 2010, the most prevalent were:

• Supplemental life insurance (31.7 percent).
• Company cars (30.7 percent).
• Club memberships (26.1 percent).

In addition, more than 20 percent of companies offered supplemental disability and voluntary deferred compensation programs to CEOs.

“Companies have a difficult challenge in balancing the types of perquisites they offer their top employees,” said Amy Kaminski, director of marketing for Compdata Surveys, which conducted the survey. “Although many companies have started offering perks of a more practical nature, offering traditional perks such as supplemental executive retirement plans can be a useful tool in maintaining employee morale. This is particularly important in light of the pay cuts executives have seen in the last couple of years.”

Industry Variation
Perks vary by industry, the survey found. For instance, note the differences in the percentage of chief financial officers that are offered voluntary deferred compensation in the following industries:

• Utilities (32 percent).
• Insurance (30.2 percent).
• Hospitality (28.9 percent).
• Banking and finance (24.7 percent).
• Services (9.2 percent).

Regional Variation
In addition, perks vary by region. For instance, companies offer club memberships to presidents at the following rates in these locations:

• Southeast (30.2 percent).
• Northeast (21.7 percent).
• West (18.6 percent).
• South Central (16.4 percent).
• Midwest (15.2 percent).

The Executive Compensation 2010/2011 survey analyzed national and regional data from over 4,500 organizations across the U.S., reporting on over 20,000 executives.

Original Article: Society for Human Resource Management

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