'More companies to freeze executive pay this year'

Bangalore: Taking a hard look at executive compensation, about 35 per cent of companies participating in a Mercer executive remuneration survey indicated that they expect to freeze base pay for executives this year.

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“While many companies in Asia have already indicated a freeze in their executive pay, we expect more organisations will follow suit once their 2009 compensation budgets are finalised,” said Wei Zheng, leader for Mercer’s executive remuneration business in Asia.

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Forty per cent of respondents expect lower actual short-term incentive (STI) payouts in the next 12 months, while 27 per cent expect lower actual long-term incentive (LTI) payouts. This change is more pronounced among Asian companies when compared with MNCs doing business in Asia.

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Incentive programmes

Companies are also taking a fresh and comprehensive look at executive incentive programmes where 43 per cent of respondents say they intend to change the performance measures of their STI plans, while 34 per cent intend to change their LTI plans.

Companies in Asia also link pay to performance in different ways according to the study. While organisations in China believe offering an attractive STI is the most effective method of driving performance and achieving company goals, they feel a strong LTI is actually more important.