Year-End Company Bonuses Take Hit in 2011

Despite the sluggish economy, compensation and perks for top managers remained steady in 2011.

It's a little hard to believe, but bonuses for America's top chief executives are set to increase again; at least for one more bonus cycle. This despite a gloomy economic climate and the under-performance of many of those executives' companies.

According to research conducted by consultancy Towers Watson, the majority of the 265 firms surveyed anticipate keeping the bonuses they pay to their troops at the same level in the near future, or even lifting them higher. Interestingly, by the same percentage the surveyed companies expected their shareholder return to match or decline from that of 2010.

If you're one of the lucky souls occupying a top floor corner office and expecting those bonuses, that seems like good news. But thanks to shareholder dissatisfaction compounded with the current outrage against the "1%" colorfully demonstrated by the Occupy movement and spreading to Main Street and even into some of those corner offices, it seems increasingly likely that the rich salaries and climbing bonuses expected by high-level managers will get a chop.

Some executives have already received that haircut. In 2009, Congress inserted a rule into its stimulus bill limiting bonuses for top managers at the banks that received federal bailout money. Although the measure didn't curtail bonuses that had been agreed up until then, it was a first and successful step in public efforts to limit those kinds of payouts. Outside of the expected grumbling from the affected executives, the move was met with little resistance or criticism.

These moves had a trickle-down effect. An influential survey released by Johnson Associates in late 2011 predicted a decline in year-end bonuses for commercial and investment bankers. Since those businesses are usually the trend-setters for bonus compensation in other industries, non-financial executives should expect to take a similar hit sooner rather than later. This trend is exacerbated by growing public awareness of just how well top managers do in terms of pure salary, let alone bonuses. Umbrella labor union organization AFL-CIO starkly illustrates the exponentially growing disparity between CEO and average blue collar worker pay: in 1980, chief executives took home salaries roughly 42 times higher than that of Joe the Plumber and his ilk. 30 years later, that figure had ballooned to 343.

Economic times remain tough. For those in high-profile, high-pay, demanding positions, that should equate to smaller payouts and even salary cuts in the most extreme cases. So in the upcoming bonus cycle, those at the top of the corporate ladder should use their reward money wisely; they might not get nearly so much the next time around.