"Compensation Plans in Curious Times: Salary Increase Budgets
Being Reduced"
Charles Peck
The Conference Board, December 2002.
Available Online
The Conference Board reports in this study that the threat of war, a sluggish
stock market and profit worries are negatively impacting companies’
compensation plans. Most respondents said that their salary increase budgets
are presently lower than initially budgeted for most employee classes. Budgets
are down across the board in the service sector and for all employee classes
except hourly workers in the manufacturing industry. The financial industry
was the one industry studied that has maintained its original salary increase
allowance. Overall, non-exempt salaried personnel are most affected by the
cutbacks with original 2003 budgets adjusted from an average 4 percent increase
to an average 3.6 percent increase. Companies reported that they would be
pursuing a variety of cost-cutting measures in the upcoming year, including
an increased use of restricted stock in place of stock options, delaying
merit increases, eliminating vacation carry-over and freezing executive
salaries. The Conference Board surveyed 75 companies in the manufacturing,
financial and service sectors for the study.
