Defferred Employee Incentive
Bonus payments have hit the news for all the wrong reasons, but deferred bonus schemes may offer employers a more ethically acceptable and economic solution.
Bonuses have rarely been out of the headlines recently, whether for the evils of short-termism that they create, or for demands that companies claw back the huge sums handed out, apparently, for failure. But there is a more acceptable version of this black sheep of the reward package – the deferred bonus.
- Deferred bonuses/incentives are increasingly appearing on employers’ agendas.
- These can simply consist of cash deferred to a later date, or can be switched into shares.
- Such arrangements save cash on the balance sheet.
- They can also be linked to performance in subsequent years.
- Deferred bonuses need to be introduced with care, especially if employees have established a contractual right to bonuses.
- Introducing a scheme retrospectively can be particularly problematic for employers, but cash-poor organisations may have no choice.