How COVID changed life at the top !
The end of the year 2020 can’t come soon enough for most of us.
Covid has wreaked havoc with the 2020 results of companies that do not belong to the essential sectors.
While executives tried to mitigate its effects by putting large sections of their staff on temporary unemployment, their own compensation was also under pressure.
Research among companies in the Benelux and France region - Essensys's area of operations - shows that at 32% of companies surveyed, the fixed remuneration of executives was temporarily lowered by an average of 15% in 2020.
For the vast majority, this mainly related to the period from March to June (the 1st lockdown). A minority of the companies extended this decrease until December 31, 2020. That is also what the partners of Essensys implemented.
In more than 86% of the cases, the reduction was done on the initiative of the executive committee, out of solidarity with the employees. Only in a minority of companies the remuneration committee or the board of directors took action.
What will 2021 bring?
Slightly more than half of the companies surveyed foresee a status quo of the fixed compensation of its executives in 2021. Essensys also expects a flat trend in remuneration for the services of executive interim managers next year.
The greatest impact for executives will be on the payment of bonuses over the year 2020. After all, in many companies the initial performance targets are no longer relevant to evaluate management performance.
Some of the remuneration committees adjusted the performance metrics during the year or introduced a shorter performance period (usually referring to the performance in the 2nd half of the year).
In most cases however, the remuneration committees opted for the use of discretionary bonuses in rewarding management performance this year.