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Slight downturn expected for merit and salary-range increases.

Executives can look forward to a downward trend for 1992 pay increases, but not a severe one, according to a recent survey by Coopers & Lybrand.

The average merit increase projected for executives will slip to 5.5% from the 5.7% awarded in 1991. Twice as many companies have reduced merit budgets as increased them, a trend that will affect all position levels.

Planned 1992 salary range adjustments also are expected to be slightly lower than those for the current year, varying by job level from 3.5% to 4.5%.

According to the survey, retailers and others most affected by the economy's softness are most conservative in their future pay plans. Education instituttions, faced with prospects of diminished government and other outside funding, also are down.

In contrast, property and casualty and health insurance companies are actively pursuing pay increase programs. Manufacturers of pharmaceutical and personal-care products are most aggressive in their pay increase plans.

The survey also revealed a sense of optimism about future business conditions. While 11% of the respondents report they have pay freezes currently in effect, less than 2% expect to still be under freezes in 1992.

Bonuses paid. The survey found that most executives eligible for bonuses in 1990 received them, although the amounts paid varied considerably.

While 94% of the companies that had achieved or exceeded their 1990 business profitability goals had distributed bonuses by July 1991, 80% of the businesses that had fallen short of their 1990 goals also had distributed bonuses by mid-1991.
COPYRIGHT 1991 American Institute of CPA's
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Copyright 1991, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Publication:Journal of Accountancy
Date:Nov 1, 1991
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