Bonuses Are Back. But Are You Ready To Announce Them?
Tomorrow morning I am not going to be able to get into work
. Nor the day after that. The workers on the rail line that I take are taking industrial action in protest over their pay. Although it makes my life more difficult I can't say I blame them. People are struggling and times are hard. We're in a recession and have the highest rate of unemployment in decades.
Public opinion, whether it's actually the case or not, is that we're in this mess because of the greed of the fat cats in the City.
And worst still, people do not feel that those fat cats have paid the price for what has happened - indeed when they're announcing mega bonuses so soon after the crash if feels as though nothing has changed. Bonuses are back and it feels like a big slap across the face of the UK tax payer.
Though side-step the media hype surrounding corporate remuneration, and those getting 'golden parachutes' pay-offs in reward for failure, and you'll find that in a lots of cases the pay is justified.
Take the case of new RBS CEO Stephen Hester, stepping up unenviably into the role left by Sir Fred; he's on a deal that will see him paid 9.7m UK pounds. But it's important to note that Hester's pay is, as most execs' are, highly dependent upon performance. His pay will be related to a series of targets for the banking group, including growth in profits and cash flow. Hester will have to justify every single penny he receives and if he doesn't cut the mustard, he's out. But nonetheless, on first glance, the figure sounds huge.
Communicating detail of corporate pay is never an easy thing to do, especially not in the current climate. This subject more than ever needs to be delivered with sensitive timing and justified down to the last penny.
Some advice from our media experts for handling this most sensitive of issues:
Joanne Hart:
"My top tip would be clarity. Everyone knows that journalists will be scouring the annual report for information on executive pay. There is nothing more annoying than having to wade through endless complex pars on LTIPs, options, bonuses etc, without a clear statement of what executives will be earning in the future or what they earned in the year just ended - with clear comparisons against the previous year."
Lindsay Williams:
"Matter of fact is the best approach here. Don't allow senior staff to be overly bullish when talking about why they or the team 'deserve' the bonus; better to stick to the 'norm in the market' explanations. It may be worth stressing the variable nature of bonuses; 'in bad times senior staff stand to lose up to 50% of their income.
It's a system that gives the business great flexibility to cut costs in the bad times but share the profits in the good times'. Also, try to find evidence of more junior staff getting bonuses, one of the major banks at one stage stressed that branch staff stood to get bonuses of 1k-2k UK pounds for the year on a salary of less than 25k UK pounds. Finally, if you think it is going to be highly news worthy accept there will be bad publicity and consider briefing a couple of journalists who can be relied upon to at last report it accurately."
Matthew Guarente:
"I would work very hard to display how the execs have hit benchmarks, and added value to the company and to shareholders. Also be clear on how much is actually cash, how much is performance-driven and therefore only payable if agreed goals are hit, and how much of the remuneration is long-term. It also needs to be benchmarked against industry peers locally and internationally. Communication wise, always stress the good news, e.g. "We have hit benchmarks, added X amount of value..." etc and therefore communicating that executives are being paid bonuses and getting rises in reward for that performance."
by: Gemma Carey
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Bonuses Are Back. But Are You Ready To Announce Them? Anaheim