Will US Firms Reverse Pay Cuts In Next 6 Months?
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Will US firms reverse pay cuts in next 6 months?

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Most US companies are not planning to reverse the pay cuts made in executive salaries during the economic crisis in the next six months despite the improving economic climate, a survey by HR consultancy Watson Wyatt says.

About 63 per cent of companies are currently not planning to reverse or restore changes made to executive salaries in the next six months, the survey revealed. Amid preparation for continuing increased public scrutiny of executive pay, the report stated, many companies are avoiding further short-term changes.

The survey revealed that only 2 per cent were considering short-term changes such as reducing salaries, as compared with 10 per cent in March. Moreover, a vast majority of employers (92 per cent) were not planning to reduce bonus opportunities or eligibility requirements.

"Companies recognise that changes to executive pay programs will be needed to stand up against growing criticism and increased pressure," Watson Wyatt global director of executive compensation consulting Ira Kay said.

"However, this change will be a long-term process and one that will require companies to focus on strengthening performance-based incentives, balancing risk and rewards, and meeting pro actively with key stakeholders to discuss their pay program rationale," Kay added.

About three in 10 companies are raising performance goals relative to this year's actual performance (29 per cent) and changing metrics (31 per cent) in their annual incentive plans, the report said.

The Watson Wyatt survey was conducted in late September and includes responses from HR and compensation executives at 187 companies