Retail Pay Ripples: Executive Bonuses Sinking, According to Korn Ferry Research
August 03 2017 - 08:00AM
Business Wire
– Nearly Three Quarters of Companies Are Paying
Little to No Senior Executive Bonuses –
– Only 15 Percent are Paying at Normal Bonus
Levels –
New research from Korn Ferry (NYSE:KFY) shows that volatility in
the retail industry is now hitting senior retail executives in the
pocketbook.
Korn Ferry conducted an analysis of 40 North American retailers
with annual sales between $1 billion and $50 billion, representing
nearly 2 million employees. The study found that 73 percent of
retailers paid little to no bonuses to senior executives in 2017
for 2016 performance, with 35 percent paying no bonus and 38
percent paying only small bonuses to their executives.
The percentage of retailers paying no bonuses to executives has
steadily increased during the last 5 years.
Retail Senior Executives Year
Percent who receive no
bonus
2017 35 percent 2016 25 percent 2015 25 percent 2014 11 percent
2013 10 percent
Only 15 percent of the retailers paid senior executives their
target or above bonus amount in 2017.
“Bonuses are typically tied to the performance of the retailer,
and historically about 50 percent of retailers achieve their
business plan for profits and pay executives their normal bonuses,”
said Craig Rowley, a Korn Ferry Senior Partner specializing in the
retail industry. “The fact that this year only 15 percent of
companies met or beat their expected profit plan and paid full
bonuses to executives exemplifies the challenges facing the
industry.”
So far in 2017, 23 major retailers have filed for bankruptcy and
24 retailers have either closed are closing more than 5,000 stores
in North America. Currently, up to 25 retailers are on the watch
list for poor financial performance.*
Today retail e-commerce makes up $395 billion of the total $3.4
trillion in retail sales – which is about 12 percent of all retail.
That percentage is expected to nearly double in coming years.
In addition to e-commerce, new increases in minimum wage in
cities across the United States are taking a huge chunk of retailer
profits, and according to Rowley, some retailers are innovating to
curb costs.
“We’re seeing a trend toward retailers taking a hybrid approach
to sales, with showroom stores where consumers can see and touch
merchandise, but can then make their orders online,” said Rowley.
“This gives consumers a chance to interact with a retailer and a
brand, and also allows smaller stores with less need for inventory
space and sales personnel.”
*Source: Business Insider
About Korn Ferry
Korn Ferry is the preeminent global people and organizational
advisory firm. We help leaders, organizations, and societies
succeed by releasing the full power and potential of people. Our
more than 7,000 colleagues deliver services through our Executive
Search, Hay Group and Futurestep divisions. Visit kornferry.com for
more information.
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Korn FerryTracy Kurschner,
612.309.3957Tracy.Kurschner@Kornferry.com
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