Cash or RSUs? Boeing Scraps Pay Increases in Favor of RSUs for 2021
December 17, 2020
How does a company reward and retain employees during hard times? This question is not new, but highlights a significant conundrum facing employers whose businesses have been adversely impacted during the COVID-19 pandemic.
For many organizations, effects on business during the pandemic thus far have been largely beyond the company’s control. At the same time, the future still feels unpredictable. Companies are faced with tough decisions: how to conserve cash, where to invest their recovery efforts, and what to do to retain and motivate employees.
This week Boeing announced a plan to scrap pay raises for 2021, and instead grant RSUs to over 80,000 employees. The RSUs vest in three years and will be given to a substantial portion of the employee population, excluding executives and union workers.
Boeing has struggled this year, first due to issues with it’s 737 Max aircraft, and then the pandemic – which essentially obliterated demand for travel and aircrafts. Boeing has shed thousands of jobs and had drastic reduction in production. It’s anticipated that a recovery will be years in the making. In a communication to employees, CEO Dave Calhoun emphasized that “The next chapter of our history will be built on a culture of excellence anchored by shared accountability and ownership.”
Boeing’s action highlights one of the core benefits of stock compensation – the opportunity to conserve precious cash by delivering value to the employee via an RSU. For one thing, Boeing employees report this is the first grant of its kind in their recent memory of the company. If the potential benefits receiving RSUs as an incentive are well understood, this may have greater impact on the employee’s perception of value than a pay increase.
Will other hard-hit companies follow suit? How are other companies handling similar dilemmas? Take and view our poll below to (anonymously) share your company’s perspective.