Aon Consulting's Radford Surveys Reports Technology Industry Hiring on the Rise, Layoffs on the Decline in 2004.

SAN JOSE, Calif. -- Stock Options Continue to Dominate Equity Compensation As Tech Rebounds

In findings from key surveys of technology industry employers - conducted by Aon Consulting's San Jose-based Radford Surveys - second quarter 2004 layoffs are at a two-year low, with less than 20 percent of companies reporting layoffs. Additionally, the findings from the July 2004 editions of Aon's Radford Benchmark, Executive and Overall Practices Surveys, which collect and analyze key compensation trends and practices for the technology industry, show that nearly one-third of responding companies have returned to what they consider "normal hiring levels."

Aon's study found that voluntary turnover among surveyed tech companies is at 8.9 percent. This marks the third year in a row that voluntary turnover has dropped, and this figure is the lowest in the history of the surveys, which date back to the mid-1980s.

Also of note, the surveys indicate that technology remains a "stock option culture" despite pressure from institutional investors and the Financial Accounting Standards Board (FASB) to expense stock options. Although some companies are currently considering or incorporating the use of restricted stock, stock options remain the primary equity compensation tool for technology firms.

"Nearly three-quarters of surveyed companies are still using stock options, and we expect that the technology industry will continue to utilize options as a key component of the compensation package," said John Radford, senior vice president for Radford Surveys, Aon Consulting. "In doing so, however, companies must ensure that the amount of options granted across the board is appropriate compared to peer group companies to remain competitive and respond to investor pressure."

Aon cautions that, given the current environment, companies will need to pay close attention to recruitment and retention issues. Radford suggests that, "With the decline of layoffs, voluntary turnover at record lows, and thawing of salary freezes, many companies are now looking to new realities of retaining key performers, who may be in jeopardy as hiring resumes."

More than 950 companies contributed data this year to the Radford Surveys domestic database of one million-plus current technology employees.

Aon provides compensation consulting services throughout the world. Aon Consulting's Radford Surveys is the leading provider of competitive compensation intelligence for the technology industries, with more than 2,000 clients worldwide. For more information, visit www.aon.com/comp or www.radford.com.

About Aon

Aon Corporation (www.aon.com) is a leading provider of risk management services, insurance and reinsurance brokerage, human capital and management consulting, and specialty insurance underwriting. The company employs approximately 52,000 professionals in its 600 offices in more than 120 countries. Backed by broad resources, industry knowledge and technical expertise, Aon professionals help a wide range of clients develop effective risk management and workforce productivity solutions.

Aon Consulting is among the top global human resources consulting firms, with 2003 revenues of $1.185 billion and 7,500 professionals in 140 offices throughout the world. Aon Consulting delivers integrated consulting solutions to help clients with employee benefits, human resources outsourcing, compensation, communication and management consulting.

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