Equities Traders, Underwriters on Track for Biggest Bonus Bumps

Incentive compensation for equities traders may climb as much as 30% while underwriters could see a 40% jump, Johnson said Thursday. Stock underwriters — who worked on a record number of special-purpose acquisition companies in the first three months of the year — are “significantly outperforming” their counterparts in debt capital markets, the consultancy said.

Mergers-and-acquisition bankers are poised to see a jump in bonuses of 15% to 20%, Johnson said. Fixed-income traders are also on track for a boost in pay. Bonuses are typically awarded after year-end and changing market conditions in coming months could alter the compensation picture.

“Combining the remarkable business recovery and with stock-market highs, financial services incentive compensation is expected to increase meaningfully for 2021,” said Alan Johnson, managing director at Johnson Associates, said in an emailed statement.

Bloomberg / May 6, 2021

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CEOs are Getting Paid Bonuses Like There Was No Pandemic

Compensation consultants have long argued that owning stock best aligns the interests of the CEO with those of the company’s shareholders, who are the ultimate owners of the company. Yet companies also note that that sticking to pre-set financial goals during economic downturns may not reward corporate leaders for any critical decisions they make that ultimately protect their companies from financial harm or position them to flourish when times improve.

“No matter how good your incentive plan is, in one year out of 10 you are going to have to make adjustments as to what’s fair,” said Alan Johnson, one of the nation’s top compensation consultants. “When goals become impossible to achieve based on something you could never have anticipated, I am pretty sympathetic to [a company board that says], with the opportunity a CEO had, they did pretty well.”

CBS News / April 22, 2021

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CHROs Flag Burnout, Excessive Stress in Board Reports

“I think generally people think 2021 will be a better year financially and hopefully the workforce will get back. As we tell clients, I think pay is really important, but I think at the moment, the fatigue and stress of the employee workforce is at least as important,” says Alan Johnson, managing partner at Johnson Associates, a compensation consulting firm focused on the financial services industry. “We need to pay people fairly and based on their contribution, but you need to be increasingly on the lookout for their mental health.”

According to Johnson, for example, some boards have deliberated over mandating vacation time in 2021 because they noticed employees were leaving it untouched last year through the pandemic. “You need to manage your employees’ mental health, and I think that’s something that’s been neglected in the pandemic here.”

Johnson says he has also cautioned his clients that the pandemic is going to be a two-year phenomenon, rather than just one.

“We all hoped that when Jan. 1 came along it would be normal, but it’s not going to be normal.”

Agenda / March 8, 2021

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Eli Lilly Doesn’t Plan to Claw Back Past Pay From Former CFO

Growing societal awareness around inappropriate behavior in recent years, accelerated by the #MeToo movement, is forcing companies to be more transparent in cases of executive misconduct, said Alan Johnson, managing director at Johnson Associates Inc., a compensation consulting firm. “Historically, companies either did nothing or allowed people to leave quietly,” Mr. Johnson said. “That appears no longer possible,” he said.

The Wall Street Journal / February 10, 2021

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Clawbacks Are Hard, So Companies Try Postponing Pay Instead

Critics warn that deferring more pay, with risk of forfeiture, could discourage executives from reporting misconduct and make it too easy for companies to rescind pay.

“If we make these penalties even more severe, are more people going to come forward or fewer?” said Alan Johnson, managing director of Johnson Associates, a financial-services industry pay-consulting firm. “Clawbacks are time-consuming and expensive—but if you’re taking back people’s pay, I think it should be.”

The Wall Street Journal / February 7, 2021

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Employees Watching Exec Pay, Consultants Say

“This is not a year for a lot of gobbledygook and lawyer-talk,” says Alan Johnson, managing partner at Johnson Associates, a compensation consulting firm that mainly works with financial services companies. “This would be a year for straightforwardness. They may disagree [about compensation decisions], but they won’t think you were hiding something or weren’t straightforward about what you were doing.”

Johnson says that while most of his clients have been largely insulated from the financial impact of the pandemic, he has emphasized with clients that it’s not the year to be “exaggerated” in pay for executives. Outside financial services, he says, it may be more complicated.

“I think firms need to be very sensitive to the optics of compensation. If you’ve laid off thousands of employees or had deaths in your workforce, to exaggerate executive pay would be [viewed negatively] this year,” he says.

Agenda / February 1, 2021

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