COMP NEWS – WorldatWork has released its 2021 survey results on Incentive Pay practices across four categories: Publically traded companies, privately held companies, nonprofit organizations, and government organizations.

The survey results on privately held companies showed that short-term incentive use (STI) and long-term incentive use (LTI) for privately held companies dropped in 2021, in some cases as a direct result of the pandemic. However, the budget for short-term incentive plans remained consistent with 2019 levels.

The prevalence of both short– and long-term incentive use at privately held companies dropped in 2021

 

Short-term incentive (STI) prevalence dropped to 93% in 2021 from 99% in 2019. The use of goal-based annual incentive plans dropped, while the use of spot awards, discretionary bonuses and profit-sharing plans increased.

 

Similarly, long-term incentive (LTI) prevalence dropped to 51% in 2021 from 62% in 2019. The 2021 prevalence was the lowest since the survey was launched in 2007.

The percentage of companies that utilized annual incentive plans dropped (86% to 76%) but the percentage of companies that utilized spot awards and discretionary bonuses went up (from 42% to 46% and 37% to 45%, respectively).

Survey results on privately held companies showed that nearly all publicly traded companies provide short-term incentives (99%) and long-term incentives (94%) in their organizations.

Likewise, roughly a third of companies surveyed modified their STI plans for 2021, with roughly one-fourth of those companies changing them as a direct result of the pandemic. Annual Incentive plans remain the most common form of incentive pay (89%).

The most prevalent modifications to both STI and LTI plans are changes to performance measures and target award levels.

 

The short-term incentive spending budget for 2021 is 7% of operating income at median. While this percentage is the same as 2020, a strengthening economy means that total STI dollar spend will likely increase in 2021.

To read the results of the surveys, click here:

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