Global insurance and reinsurance broker Willis Towers Watson (WTW) has adopted changes to the short-term incentive compensation program (the STI Program) for its executive officers for 2020, designed to promote a more unifying, team mindset in light of COVID-19-related uncertainty.
The changes mean that under the 2020 STI Program, all executive officers will be eligible to receive an annual target award expressed as a percentage of the individual’s base salary, with the awards weighted 80% upon enterprise financial results, and 20% upon individual objectives.
Under the 2019 STI Program, while each executive officer was eligible to receive an annual target award as expressed as a percentage of his or her base salary, weighted performance goals based upon individual responsibilities meant that only the Chief Executive Officer’s (CEO) award was weighted 80% financial results and 20% upon individual objectives.
Prior to the recent amendments made on June 5th, 2020, the award for those officers leading a business segment or business geography were based 20% upon enterprise financial results, 60% upon the business segment or geography performance, as relevant, and 20% upon individual objectives. For those officers leading a corporate function, the awards were based 60% upon enterprise financial results, 20% upon corporate function performance, and 20% upon individual objectives.
“Financial performance metrics for the 2019 STI Program awards were based on total adjusted revenues and adjusted operating income on an enterprise and business segment/geography level,” explains WTW.
So, the change to its STI Program for 2020 means that all executive officers will be eligible to receive an annual target award, with the awards to now be weighted in the same manner for all.
The global re/insurance broker says that this change is designed to incentivise collaboration among the executive officers.
“These changes to the executive officer STI Program’s methodology were made so that the overall funding percentage for that STI Program (as a percentage of target) would be closer to the funding percentage for short-term incentive awards made to a broader group of employees eligible for such awards and so that executive officers from different business units would be more closely aligned, thereby promoting an even more unifying, team mindset that is intended to help the Company manage the economic uncertainty created by the COVID-19 pandemic,” explains the broker.
