Share Remuneration Myth Exposed

[Sydney, AUSTRALIA] The popular perception that Internet companies place strong emphasis on long
term incentives such as equity as a means of remunerating employees has been
exposed as a myth in the Australian market.

A survey by PricewaterhouseCoopers (PwC) has revealed that e-commerce
organizations are just as likely to use short term incentives as long term
ones, including similar incentives to those used by ‘traditional’ businesses
such as planned individual bonuses, sales commission, discretionary bonuses
and profit sharing.

The e-Commerce Remuneration Survey indicates that 40 percent of e-commerce
companies use short term incentives, while 20 percent of respondents use no
incentives at all.

The report also shows that salaries of senior employees in e-commerce
organizations are similar to those holding equivalent roles in traditional
organizations, with the exception of the CFO role.

“Many people assume that e-commerce organizations, and dot-coms in
particular, are too cash poor to pay their employees competitive salaries,
and therefore place a strong emphasis on equity as remuneration,” said PwC’s
Global Human Resource Services (GHRS) principal consultant Fiona
Shakespeare.

“Our survey shows this is clearly not true,” she said. “While many believe
e-commerce organizations do not have the resources to design, implement and
pay short-term cash incentives, our survey clearly indicates otherwise.”

However, Ms. Shakespeare warned that e-commerce organizations would need to
look carefully at the methods used to reward and motivate key employees
given the recent correction in tech stocks on share markets across the
world.

“The dramatic fall in performance of tech stocks raises the question of
whether these companies are considering compensating employees with cash
incentives,” Ms. Shakespeare said. “Our survey shows that most are not,
preferring instead to offer additional equity, which of course may or may
not pay off in the future.”

“And if these companies start to change their focus from innovation and
product development to improving financial performance, they will also need
to structure more competitive packages for senior financial executives to
attract and retain the right level of expertise,” she said.

The PricewaterhouseCoopers e-Commerce Remuneration Survey is the first of
several surveys conducted on Human Resource practices in Australian
e-commerce organizations. The data was collected between August and October
2000 via an online questionnaire, and analyzed by statistical and
remuneration specialists within PwC’s Global Human Resource Solutions
(GHRS) consulting practice.

Responses were received from 35 organizations, the large majority of which
were Australian-based dot-coms. Results were compared with published
benchmark data on traditional organizations from varied industries and data
on e-commerce organizations in the U.S. and U.K.

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