Johnson & Johnson To Cut Employee Bonuses
2 CommentsBy Ed Silverman // February 18th, 2010 // 7:56 am
The health care giant plans to cut yearly performance bonus targets for 38 percent of its employees and freeze salaries for certain workers, according to The Wall Street Journal, which cites an internal announcement and other company documents. The move comes just as Bristol-Myers Squibb freezes salaries (see here).
On Jan. 25, J&J told employees the initiative will standardize compensation across businesses and regions, making it easier to move around within the company. In the US, the changes will bring bonus targets in line with market levels, one document said, and the moves apply across the board, except for those covered by collective bargaining. J&J established 3,000 job classifications and 20 pay grades. “The current challenging economic environment has reinforced our decision to move forward with global implementation in January 2010,” according to a slide presentation, the Journal writes.
Performance bonus targets will increase for 27 percent of employees, remain the same for 35 percent and decrease for 38 percent, according to the internal announcement. For various types of yearly stock bonuses, “more people will be impacted with decreases,” but no further info was provided. Those with salaries above their pay grade will receive lump-sum payments instead of raises, starting in 2011, but the documents didn’t say how many employees will have their salaries frozen.
And what of ceo Bill Weldon?
No word yet, but last year, he declined a salary raise. His total compensation in 2008 fell 4.1 percent from the year before to $29.4 million, according to the most recent proxy filed with the US Securities and Exchange Commission (see page 43).
Christopher
A prudent move given the state of the market and their share price. I imagine the thousands who lost their jobs would happily accept this alternative.
But one phrase is interesting, that this move will standardize compensation across busiesses and regions, making it easier to move round within the company.
There is significant disparity between different countries’ pay structure, national tax levels, benefits etc which are well known. That a company is apparently attempting to standardize compensation internally is fascinating. I’m guessing the new corprate benchmark will not be set at the highest national levels though, so more savings to follow worldwide.
Still, better than the pink slip.
Robert
The whole bonus scandals seem like a red herring. The problem isn’t a few top executives getting a bonus package, the REAL problem is the institution itself. I can’t believe that people in the 21st century still can’t see the old scapegoat trick when it’s right in front of their faces.