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March 27, 2009
Executive Chill: Survey Finds Half of Companies Freezing Exec Salaries
A new employer survey has found that half of companies are freezing executive base salaries in 2009 and that an additional 15 percent are “implementing salary reduction programs.”

“Companies are expecting 2009 to be a challenging year for business growth and financial stability,” Don Nemerov, a Compensation and Benefits executive director at Grant Thornton LLP, said in a press release. “As they recast business plans for leaner times, this is impacting executive compensation programs dramatically.”

The Grant Thronton survey also found that only about 25 percent of companies have implemented or are considering a special retention program. Grant Thronton observes that this figure is well below that of the number of companies implementing base salary freezes, and wonders if those companies that have instituted freezes or reductions but aren’t focusing on retention “may risk losing some of their top talent.”

“To ensure retention and motivation of key employees, our survey findings indicate that U.S. companies will provide cash and equity awards at levels lower than 2008," said Nemerov. "To the extent that talent retention is a concern, companies may need to focus their compensation program on a smaller, more selective group of participants in 2009.”

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