Severance Plans Weathered the Recession and Continue to be a Key Employee Benefit

August 16, 2011 — SCOTTSDALE, ARIZ. — A bit of comfort for terminated workers: While companies have been slashing payrolls in recent years, a new study finds that at least they haven’t been trimming their severance packages. Severance and change-in-control plans have survived the recession fairly intact, according to a study released this week by WorldatWork and Innovative Compensation and Benefits Concepts LLC (ICBC), an HR consulting firm.

Key findings from the study, Severance and Change-in-Control Practices 2011, include:

– Many organizations still maintain a formal written severance plan as they always have for the CEO, one for key executives, and one for everyone else.
– Years of service, position, pay level, and employment agreement still seem to be the most important determinants of severance status.
– Most organizations still provide one or two weeks’ severance pay per year of service, with many providing a tier of benefits up to the maximum.
– In spite of the difficult economy, 44% of organizations continue to subsidize COBRA (full or partial) for all employees.
– Nearly half of surveyed employers provide outplacement benefits to all affected employees while 36% provide it on a case-by-case basis, up from 27% two years ago.
– Tax gross-ups — the practice of increasing the amount of a cash payment to offset the tax impact on the individual resulting from the cash payment — continue to decline. Six percent of respondents said they provide full or partial gross ups of their executives’ severance pay, down from 8% in 2009.

“One finding that may come as a surprise is that severance and change-in-control plans are being reviewed less frequently by companies today than two years ago,” said Don Lindner, CCP, executive compensation practice leader for WorldatWork. “But that doesn’t diminish their importance as employee benefits and tools to ease the job transition.”

“Because of the size and importance of executive severance and change-in-control plans, annual reviews should be conducted by Compensation Committees,” said the study’s author, Bob Jones, JD, CPA, CEBS. “This is best done by making this topic an agenda item that is covered on a regular basis.”

About the Survey
The Severance and Change-in-Control Practices 2011 survey was conducted from May 18-June 3, 2011. Surveys were sent electronically to a random representative sample of 5,278 WorldatWork members. A total of 567 members participated in this survey, generating an 11-percent response rate. This high response rate and a similar demographic profile between survey respondents and the general WorldatWork membership provides a high level of confidence regarding the validity of the data. The survey has been conducted every two years since 2003.

About WorldatWork®
The Total Rewards Association

WorldatWork ( is a not-for-profit organization providing education, conferences and research focused on global human resources issues including compensation, benefits, work-life and integrated total rewards to attract, motivate and retain a talented workforce. Founded in 1955, WorldatWork has nearly 30,000 members in more than 100 countries. Its affiliate organization, WorldatWork Society of Certified Professionals®, is the certifying body for the prestigious Certified Compensation Professional® (CCP®), Certified Benefits Professional® (CBP), Global Remuneration Professional (GRP®), Work-Life Certified Professional™ (WLCP®), Certified Sales Compensation Professional™ (CSCP™), and Certified Executive Compensation Professional™ (CECP™). WorldatWork has offices in Scottsdale, Arizona, and Washington, D.C.

The WorldatWork group of registered marks includes: Alliance for Work-Life Progress® or AWLP®, workspan®, WorldatWork ® Journal, and Compensation Conundrum®.

About Innovative Compensation and Benefits Concepts, LLC

Innovative Compensation and Benefits Concepts, LLC is a global human resources consulting firm specializing in compensation and employee benefits. It provides objective consulting advice to Compensation Committees, Boards of Directors, senior management, and human resources clients of public, private, and not-for-profit companies worldwide. It is headquartered in Bryn Mawr, Pennsylvania, just outside Philadelphia.

This press release was distributed through PR Web by Human Resources Marketer (HR Marketer: on behalf of the company listed above.