| Preliminary data taken from Chief Executive’s annual CEO and Senior Executive Compensation study shows 40 percent of manufacturing CEOs are cutting (or planning to cut) their compensation in 2020 as a result of Covid, and nearly two-thirds of those (63 percent) are looking at a 10 to 30 percent cut, with one-fifth choosing to cut their salary by 50 percent or more.
It is a fairly dramatic number; yet it is in line with other industries we have surveyed as part of a study of more than 1,500 U.S. companies across all sizes, industries, regions and ownership types. Overall, some 38 percent of U.S. private company CEOs we surveyed said they had chosen to take a salary cut in 2020 to help their companies navigate the Covid crisis, and 58 percent have reduced their compensation (or are planning to reduce it) by 10 to 30 percent, with 22 percent of them agreeing to a cut of 50 percent or more.
When asked for how long the cuts would last, manufacturing CEOs were divided, with a quarter saying the reduction will last 3 to 6 months and another quarter saying it will last until the company can return to a level of profitability. Nearly 20 percent were not sure of the duration.
| This preliminary data, which we’ve released early this year to help guide CEO decision-making during Covid, also shows that the magnitude and duration of the cuts may be partly driven by sales projections, with 64 percent of manufacturing CEOs participating in the study say they anticipate their 2020 revenue growth rate to be down compared to last year. That is 10 percent more than the average across other industries.
In addition, 71 percent of manufacturing CEOs say they are expecting that growth rate to be down by more than 10 percent this year, and 41 percent anticipating revenues to be off by 20 percent or more.
With respect to profitability, 20 percent of the manufacturing CEOs we polled are forecasting that their company’s operating profit margin (EBITDA) for the current year as a percentage of gross sales will be negative, compared to 26 percent of CEOs across all sectors. And for the great majority of those CEOs, the decline is expected to be by less than 10 percent.
The full report, taking into consideration a host of other variables, including company size (by annual revenues and number of employees), region and ownership structure, as well as quarterly data on base salaries, bonuses, equity grants and gains, benefits and perks will be presented in our 2020-21 CEO & Senior Executive Compensation Report for Private Companies scheduled to be published in the fall.
— Melanie Nolen, Research Director, Chief Executive Group. |
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