Mixed approach to COVID-19 salary sacrifice and dividends, poll finds
London, 21 May 2020 – According to our poll out today in coalescence with The Chartered Governance Institute, companies and other organisations are taking a mixed approach to salary sacrifice during the Coronavirus pandemic. Some 41% of executive directors have taken a voluntary reduction in base salary (50% have not), 31% of non-executive directors have taken a reduction (56% have not) and 31% of senior managers on the management board have taken a reduction while 60% have not. There is less disparity in terms of the amount of the reduction with the majority of people across all three groups taking a 20% cut.
Peter Swabey, Policy and Research Director at The Chartered Governance Institute said:
“Remuneration is very much specific to an individual organisation and just as there is variance under normal circumstances, not all will follow the same course of action in response to COVID-19. While not all directors have voted to take a pay cut that does not mean that they are doing nothing. Some are foregoing their annual pay increase, others are donating some of their salary to the National Emergencies Trust or giving to homeless charities.”
In terms of dividend payments, 42% of those companies that responded to the survey were not planning to pay a dividend this year, 26% were and 32% were unsure.
When asked how confident they were about their organisation surviving the financial impact of COVID-19, with 1 on the confidence scale being not at all and 10 being very, the majority of respondents chose 10. Eight and nine were the next highest scores, with only one respondent having no confidence at all.
Answers about confidence in the ability to survive included the following:
- No financial impact on our company at present although the subsequent recession will give its challenges
- We are both small enough to manage the impact while large enough to be able to lose some revenue without collapse
- Survival will depend on execution of a downturn plan
- The assessment of risks and opportunities has never been so important than during this crisis
- Further changes to staff levels will be considered if necessary
- I work for a not for profit housing association and whilst we will see some reduction in our tenants’ ability to pay, we are financially strong and need to continue delivering services. Our focus is therefore on supporting our vulnerable customers and employing safe systems of work for colleagues.
If you need advice on staff retention, benchmarking, permanent or interim hiring or would like to have a confidential discussion about your job search, then please reach out to a member of the team on 020 3589 0333.