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Article | Executive Pay Memo North America

Pulse survey reveals tech industry holding the line on stock-based compensation

By Jon Randall , Mark Kazmierowski and Jake Fox | April 26, 2023

Our survey of tech companies does not suggest a broad tech industry pull-back in 2023. 
Executive Compensation

Recent press articles have spotlighted a few marquee tech industry companies exploring a pull-back on their bonus payouts and/or stock-based compensation programs. This has prompted much speculation about whether these actions may be foreshadowing a broader “pull-back” trend within the tech industry, particularly with regard to stock-based compensation.

However, based on a Q1 survey of 69 tech companies conducted by WTW, the overall tech industry will most likely be holding the line on stock-based compensation - both in terms of participation by job level and the dollar value of awards.

WTW Tech Industry 2023 Pay Actions Pulse Survey – background

Several factors complicate compensation planning for tech companies in 2023, including a slowdown in previously robust hiring, depressed company stock price values and general economic uncertainty. To gain insight into how tech companies are navigating this uncertainty, WTW fielded a pulse survey in February 2023, spanning base pay, annual incentives, and long-term incentives. Sixty-nine tech companies participated in the survey, with a combined population of approximately 4.1 million employees, and a median revenue of $6.2 billion. Survey participants represent multiple tech sectors and include 31 S&P 500 companies.

No widespread stock pull-back in 2023

Although there are certainly some notable tech companies that have reportedly pulled back on their performance-based compensation programs, a review of plans across the wider sample of tech companies in this survey does not suggest a broad tech industry pull-back in 2023.

About half of respondents in the survey also expect 2023 share spend to stay approximately the same in 2023 as 2022. Given the declines in stock prices within the tech sector, and little expected changes to participation in long-term incentive plans (LTI) or target LTI dollar values, we might have expected a higher percentage of companies reporting an expected increase in share spend.

However, the survey findings suggest that the staffing actions taken/planned in 2022-23 (e.g., layoffs and/or cancellation of significant new hire grants) have allowed some companies to manage their year-over-year change in share spend.

Key survey findings

Base pay

The median total base pay adjustment in 2023 is expected to be 4.75%, only a slight dip from a median of 5.0% in 2022. Although nearly 40% of companies expect to reduce total base pay budgets to some degree, only 9% expect to pull back “significantly” from 2022. (Note: the total pay budget comprises merit increases, promotional increases, and any other base pay adjustments).

Compares median total pay increase budget between 2022 and expectations for 2023
The median total pay increase budget remains close to 2022

More than 3 out of 4 (79%) of survey participants reported challenges in staffing tech job families ranging from “somewhat” to “very challenging” to fill. This compared to 62% reporting staffing challenges for non-tech job families. For 2023, expected tech industry total salary increase budgets remain higher than general industry, and 27% of survey respondents expect a total base pay increase budget over 6%.

Depicts expected 2023 total salary increase budgets for tech vs general industry
Expected 2023 total salary increase budgets for tech remain higher than general industry

2023 bonuses

Notwithstanding tech sector headwinds, six of 10 companies expect funding for bonus payouts made in 2023 (for 2022 performance) to be at 100% of target or better. Most companies (77%) expect to fund bonus pools at between 75% and 125% of target bonus, and only 8% expected funding lower than 75% of target.

Fewer than one in 10 companies differentiate bonus targets for tech versus non-tech job families.

Stock-based compensation

Participation. Most companies report maintaining current LTI participation in 2023 as they balance the need to prudently manage share spend against the need to continually attract, retain, and engage talent. That said, macro level participation at some companies has dropped due to actions taken in FY22 and/or taken or planned for FY23, including cancellation of new hire employee stock awards and in some cases, layoffs.

Expected participation varies somewhat for tech vs. non-tech job families and there are nuances by job level. For example, for tech job families, only 3%-5% of companies reported plans to decrease LTI participation for jobs at “Sr. Professional” through “VP and Above” levels, compared to about 10% with plans to pull-back on participation for jobs at “Mid-” and “Entry-” level professional levels. For non-tech families, the LTI pull-back starts earlier (at the Manager and below levels).

In addition, there are important differences depending upon how companies are choosing to manage their overall share spend/usage. For companies who plan to decrease their overall share spend in 2023, more than 30% plan to decrease LTI participation at lower job levels for both tech and non-tech job families. In contrast, for companies expecting share spend to remain “approximately the same” only 4% and 7% plan to reduce LTI participation at lower levels for tech and non-tech job families, respectively.

LTI values. Most companies report holding the line on LTI grant values – a finding that we were a bit surprised to see given generally depressed stock prices within the tech sector. Although few organizations expect to increase target LTI dollar values in 2023, 15% expect to do so for tech job families.

Generally, for those companies that plan to decrease their LTI grant values in 2023, their target grants will remain at a premium to market (e.g., 65th percentile or greater), whereas those that are increasing grant values are more likely to be targeting the 50th percentile.

Keep a close watch beyond 2023

Although the results of our pulse survey do not suggest a broad tech industry pull-back in 2023, this remains a dynamic situation, which warrants ongoing monitoring of changes/variations in pay practices across different tech sectors (and based on size of company), as companies face additional potential economic headwinds in 2023 and into 2024.

For expert assistance in addressing the total rewards implications of this study for your organization, please connect with your local WTW consultant or contact one of the authors below.

With contributions from Alice Zhao, Analyst, Toronto.

A version of this article appeared in Workspan on April 13, 2023. All rights reserved, reprinted with permission.


Senior Director, Work & Rewards
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Senior Director, Executive Compensation (San Francisco)
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Associate, Work & Rewards (Stamford)
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