Singapore - Top executives should expect little to no bonus this year, as an overwhelming 72% of companies here say they plan to trim the size of their bonuses.
In a survey by Hewitt Associates, 72% of 42 Singapore-based organisations say they expect to pay smaller executive bonuses this year. Seventeen percent also expect to do away with bonuses altogether.
The report also found that nearly half of organisations may not provide merit increases to their top executives in 2009.
The Singapore figures are more conservative compared to the rest to the rest of the Asia Pacific countries. Regionally, 78% of organisations say they are expect payouts to below targeted levels, and only 15% do not expect to pay any bonuses.
"Smaller bonus payouts for top management teams this year shows that employers in Singapore are willing to make long-term sacrifices during this time for longer business sustainability," says Lee Shiau Fei, Hewitt’s senior executive compensation consultant for South East Asia.
Equity compensation in Singapore is also taking a hit, as a third of survey respondents say more than 75% of their outstanding stock options are currently underwater or lower than its exercise price.
Similarly, any equity plans such as performance shares, whereby executives are given stocks upon completion or achievement of certain set targets, are now under pressure, says Olivier Ricaille, senior consultant in executive compensation at Hewitt South East Asia.
This is due to depressed share prices which deliver lower value to employees, coupled with performance metrics which are now harder to achieve. Hence, when companies want to grant employees long-term incentive shares, the challenge now lies in setting the right targets. "[Because] right now with the economic downturn and stability of the markets, it is hard to forecast what will happen in the next few years."
While these plans are now facing severe pressure, they are also gaining in popularity, Ricaille adds. "It allows [the] board to select the right metrics for measuring management performance by addressing the right future strategic focus in this current economic tough times."
The Hewitt Asia survey garnered 529 responses from 312 organisations across 12 countries in the region.
