The Buck Consultants survey reported that the average pay increase for 2003 is budgeted for 4% – up slightly from 2002’s actual increase of 3.9%.
During 2002, organizations implemented various measures to reduce their personnel costs. Some lowered their compensation budgets, others delayed scheduled increases and approximately 6% of the more than 700 employers surveyed froze salaries, Buck said.
One-third of the participants paid bonuses at below-target levels (the median budget payout among respondents was 9%, compared to budgeted levels of 11%), and 20% made no bonus payouts at all — more than four times as many as in 2001, Buck said.
But, even with a bear market, the use of company stock and stock options as compensation continued to climb in 2002. In fact, nearly 21% of companies with an equity compensation plan reported that they lowered the criteria for participation in the past three years, according to Buck.
For example, among Fortune 1000 companies, 69% offered hiring bonuses in 2002, compared to 78% last year. However, the average hiring bonus for executives in 2002 ($20,000) was higher ($15,000 in 2001).
The situation was reversed for retention bonuses, with approximately 36% of Fortune 1000 companies offering an average of $16,250 for executives this year, compared to the 51% who offered an average of $22,500 last year.