Global re/insurance brokerage Aon has announced a series of salary reductions agreed to by its named executive officers, in response to the ongoing coronavirus pandemic.
Each of the Company’s NEOs, Gregory Case, Chief Executive Officer, Christa Davies, Chief Financial Officer, Eric Andersen, President, and John Bruno, Chief Operating Officer, as well as Tony Goland, the Company’s Chief Innovation Officer, all agreed to a 50% reduction in base salary.
Aon’s non-executive directors, meanwhile, will see a reduction in their cash compensation.
These measures will be effective from May 1 through to December 31, or until such other date as decided by the company.
Aon says it has worked with local leaders around the world to determine the most equitable way to apply a temporary salary reduction to its broader colleague base and have developed a tailored approach based on a set of criteria, including the cost-of-living.
Based on that analysis, Aon has set a floor in each country. This means that approximately 30% of colleagues will see no reduction.
Aon is also working with local leaders and planning for the remaining 70% of its staff to take a reduction of approximately 20% of salary, which will be implemented in accordance with local practices.
Additionally, Aon has paused its stock buyback plan and set aside those funds, underlining its view that paying a regular dividend is consistent with maintaining an investment grade rating and fundamental to accessing the capital markets.
Aon’s CEO Greg Case issued a statement to colleagues in which he made clear that none of his employees will lose their jobs because of the COVID-19 outbreak.
“Bringing the best of our firm to clients requires every single one of our colleagues and we are committed to an approach that allows all of us to continue supporting that mission – that’s core to the premise of Aon United,” he explained.
Case also voiced concern for actions taken by the banking sector as they, “represent a belief that payment behavior is changing.”
He said that it’s one thing to reduce marginal expense to match declines in revenue, but an entirely different challenge if there are indications that payments will be deferred to an unknown date in the future.
“We simply do not know at what rate or over what time period payment behavior could change.
“Our priority will be our colleagues, clients, and our firm,” Case added. “We will always look to protect our colleagues’ needs. Our value to clients stems fully from the collective capabilities of our colleagues. The concerns of all other stakeholders are important, but secondary at this time.
“We will be sober in our assessment of the landscape. We recognize the extraordinarily fluid nature of the business landscape and will continue to make swift decisions that protect our operational flexibility. We will not take a “wait and see” approach to the future of our firm.
“We will focus on the things we can control. This is the hand we have all been dealt. No amount of complaining about it or comparing our approach to others will change the fact set. We own our destiny and we wouldn’t want it any other way.”
Aon’s commitment, Case said, is to act with integrity and protect its colleagues and business.
“We will continue to apply our principles-based approach to how we manage through this crisis and review these actions monthly,” he concluded.