Singapore - Not only is base pay freezing up for executives based in Singapore, they can also expect lower performance incentive payouts for 2009 to possibly even 2010, if the economic situation remains dire.  

It is looking bleak for executives as their incentive payouts bear the recession brunt. Mercer's latest executive remuneration trends survey reveals 40% of companies in Asia expect lower actual short-term incentive (STI) payouts in the next 12 months, while 27% expect lower actual long-term incentive (LTI) payouts. More than 50% of respondents in Singapore have already indicated a decrease in their actual STI payouts for the year ahead. Furthermore, lower than expected financial results in 2009 will dent executives' STI payouts for early 2010 as well.

Derek Berry, business leader for Mercer ASEAN's human capital, says, "The immediate focus tends to be on STI as it affects cash requirements more immediately and cash is critical to survival during difficult times."

Similarly, depending on how strong their results were during 2008, companies might still be reeling back from the fallouts of last year's performance-related STI obligations, explains Berry. This is reflected with 43% of respondents intending to change the performance measures of their STI plans while 34% intend to change the performance measures of their LTI plans.

This means the short term rewards forecast is looking grim for all executives ahead. Berry says, "If the situation worsens during financial year 2009, it is likely that the emphasis will shift towards LTI."

Would a LTI programme be more effective for companies though? In concept, it does help, says Berry, "focus executives' perspectives beyond the current climate and aids retention".

This might just bode well for high performing or high potential executives working for the 68% of companies which reported having an existing LTI plan. Then again, there are no clear favourites for either pay trend as it is dependent on the company's objectives during this period. Berry says, "At the same time, use of a targeted STI can reward executives for taking actions in the current year that will place the company in a stronger position for any upturn."