Pearl Meyer Survey Finds Organizations Mixed about Sharing Tax Benefits with Employees

--Short-term rewards more common with fewer long-term changes planned--

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Feb 13, 2018, 09:00 ET

NEW YORK, Feb. 13, 2018 /PRNewswire/ -- Organizations are almost evenly split about whether or not they have or may increase pay and benefits for employees in reaction to the new tax reform law, according to a new survey from executive compensation consultancy Pearl Meyer. More companies are still considering changes compared to those that have already taken action.

Less than sixty days after the Tax Cuts and Jobs Act became law, nearly 20% of responding organizations have provided some enhanced benefits and approximately 35% are considering new or additional changes.

Key findings of the survey include:

12% have already made changes
7% have already made changes and are considering additional changes
29% are considering changes
52% of respondents are not planning to make any changes to their broad-based employee reward system

"The respondents who don't plan to take any action cite multiple reasons, including the fact that they don't anticipate their company will recognize any benefits from the new tax structure or they already offer programs like profit sharing, which are directly correlated to the profitability of the organization," said Dan Wetzel, managing director at Pearl Meyer. "Because there is such a public focus on the companies who are taking actions such as a one-time bonus, we suggest that those who are not making changes be prepared to answer employee questions by developing a solid communications plan to explain their rationale."

Of companies that have already made changes, 65% awarded a one-time cash bonus, most commonly $1000 (54%) or less (27%). Close to half (46%) increased their minimum (or hourly) wage. Additionally 42% of the companies made other structural changes to pay and benefits (e.g., merit pool increases, enhanced benefit programs, increased retirement contributions, etc.) Of the companies considering action, 47% are planning or considering a cash bonus, 34% are considering an increase to their minimum (or hourly) wage, and 58% are considering making other structure changes to pay and benefits.

The top reasons for making changes were sharing the benefits of tax reform (70%), rewarding/recognizing employee importance to success of the business (67%), and staying competitive (32%). Respondent reasons for contemplating future actions generally mirror the rationale for those that have already taken action, although these companies cite considering the competitive environment more often and fewer anticipate improved expectations for their business.

The number of companies considering capital investments (23%) outweigh those who already have announced taking that step (5%). Just 4% have plans to increase hiring and 7% are considering a larger workforce.

About the Survey
Pearl Meyer surveyed companies from January 24-31, 2018. Nearly sixty percent of the 301 respondents were from publicly-held for-profit companies with the majority of respondents from mid to large companies ($300 million up to $10 billion). For a copy of the complete survey results, download the report at https://www.pearlmeyer.com/knowledge-share/research-report/sharing-tax-bill-benefits-with-employees.

Additional Resources
For more information about the impact of tax reform on executive compensation, please see www.pearlmeyer.com/tax-reform.

About Pearl Meyer
Pearl Meyer is the leading advisor to boards and senior management on the alignment of executive compensation with business and leadership strategy, making pay programs a powerful catalyst for value creation and competitive advantage. Pearl Meyer's global clients stand at the forefront of their industries and range from emerging high-growth, not-for-profit, and private companies to the Fortune 500 and FTSE 350. The firm has offices in New York, Atlanta, Boston, Charlotte, Chicago, Houston, London, Los Angeles, and San Francisco.