NEW YORK, March 26, 2014 – A survey released by Buck Consultants, A Xerox Company (NYSE: XRX), found a significant increase across the globe in the use of cash-based long-term incentives (LTI) as part of employee compensation programs.
For example, since 2012 cash LTI awards increased from nine percent to 18 percent in Canada, six percent to 18 percent in the UK, seven percent to 18 percent in France, and 10 percent to 14 percent in the U.S.
Buck Consultants’ annual Global Long-Term Incentive Practices Survey confirmed that companies are substituting cash LTI for equity-based awards where it is appropriate. Additionally, the use of cash LTI awards increased in the U.S. at all employee levels (except CEO) and more than doubled over the past two years for vice presidents (VP), directors, and managers.
“Companies are taking a hard look at the use of equity-based incentives and determining that, in some cases, cash may be the more effective motivator,” said Sandra Sussman, a director in Buck Consultants’ compensation practice.
Results indicate full-value awards remain the most prevalent vehicle, with the most value being delivered in the form of time-based restricted stock/units.
Buck’s survey examined the global long-term incentive compensation practices of more than 130 participating companies in 40 countries. Multinational companies considering the use of equity-based LTI on a global basis must consider, among other things, the culture, local market conditions, regulatory challenges and tax implications of each country where employees are located. The GLTI Survey is a resource that provides guidance to compensation professionals about whether and where to grant equity-based awards.
Other key survey findings include:
– Stock options continued to decline in use.
– Retention is now the most often cited reason for making off-cycle grants, increasing from 77 percent in 2012 to 97 percent in 2013.
– Overall median value of equity delivered to U.S. employees continues to be significantly higher than that to employees in other countries and has remained stable over the years.
Participation in LTI plans continued to decline for lower-level employees across the globe, except in Europe and Canada, which saw a rebound.
“In the U.S., participation rates have been on the decline for manager-level employees and below since 2010, while high participation rates for VP and director-level positions have remained stable,” said Sussman. “We see the greatest declines in participation amongst lower-level employee groups which could be an indication that employers are becoming more concerned about motivating and retaining key senior employees whose roles and decisions are perceived to have a stronger and more direct connection to success drivers and stock price performance.”
About the Survey
Buck’s iQuantic Global Long-Term Incentive Practices Survey is designed to provide market data for compensation professionals when evaluating LTI delivery to employees. Participation is open for the 2014 survey, which marks its 20th anniversary this year.
The report is available at no cost. Media can request a copy by contacting Ed Gadowski at Edward.Gadowski@buckconsultants.com or +1-910-253-9816. All other interested parties can receive a copy by visiting Buck’s website here.
About Buck Consultants
Buck Consultants, A Xerox Company, is a leader in human resource and benefits consulting with more than 1,500 professionals worldwide. Founded in 1916 to advise clients in establishing and funding some of the nation’s first public and private retirement programs, Buck is an innovator in the areas of retirement benefits, health and welfare programs, talent and human resources solutions, compensation and employee communication. News and other information about Buck Consultants are available at http://www.buckconsultants.com.
Since the invention of Xerography more than 75 years ago, the people of Xerox (NYSE: XRX) have helped businesses simplify the way work gets done. Today, we are the global leader in business process and document management, helping organizations of any size be more efficient so they can focus on their real business. Headquartered in Norwalk, Conn., more than 140,000 Xerox employees serve clients in 160 countries, providing business services, printing equipment and software for commercial and government organizations. Learn more at www.xerox.com.
Ed Gadowski, Buck Consultants, A Xerox Company, +1-910-253-9816, Edward.Gadowski@buckconsultants.com
Nicole Pavlas, Text 100 for Buck Consultants, +1-585-697-2620, firstname.lastname@example.org
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