General Motors furloughed 6500 salaried employees who will receive 75% of their normal pay. Senior executives will take a pandemic pay cuts of 5-10% and defer 20% of their salaries
Buzz Feed told employees who make less than $65,000 they will face a 5% pay cut, and employees who make more than $125,000 will take a pay cut of 10%. Executives will lose 14-25%.
ESPN asked 100 of its highest paid employees to take a voluntary 15% pay cut over three months.
AON, with 50,000 employees world wide, reduced top executives base pay by 50% and other employees getting a cut of 20%. Aon’s chief executive, Greg Case, said, “We wanted to say no one would lose their job because of Covid-19.”
The Conference Board has been tracking pandemic pay cuts for publicly traded companies using SEC filings by Russell 3000 Index listed firms. Eleven percent of all companies on the Index announced base pay cuts between March 1 and April 24. Sixty-one percent of those companies applied pay cuts to the base salaries of senior managers who make less than top-tier executives.
A Willis Towers Watson survey the week of March 23 found that 812 large U.S. companies, mostly multinationals, froze salaries for 2020 (8%) or reduced or delayed salary increases (12%). An additional 22% were considering taking one or both of these actions. Relatively few of this very large corporations had actually cut salaries though.
Avoiding layoffs was the primary motivation for across-the-board pandemic pay cuts particularly at the senior level. ”What we’re seeing this time around is more of a sense of shared sacrifice and shared pain,” Case added. From a business strategy point-of-view, avoiding layoffs leaves a company better prepared for when the economy does rebound. Case went on to say, “When clients need us most, we will be there.”
The bad news? The Conference Board thinks a second wave of pandemic pay cuts could happen as the ripple effects of Covid-19 continue to negatively impact company’s bottom lines.