These are days of high anxiety and low morale behind Nike’s berm.
The sneaker giant’s 12,000 Portland-area employees have a whole laundry list of issues to worry about: The pandemic, big financial losses, looming layoffs, a new CEO with a new executive team and new expectations.
But last Friday brought an old and beloved Nike tradition that eased the pain. It was annual bonus day, when thousands of qualifying employees can receive 5% to 30% of their annual pay in one lump sum. With many Nike employees pulling down six-figure salaries, the annual bonuses commonly amount to $10,000-$15,000 -- and for some employees, much more.
The bonus comes not in the form of stock or stock options. There is no vesting period. It’s not Nike monopoly money good for 20% off at the nearest NikeTown.
It’s cash -- an instant windfall in your wallet.
One employee said after her first eleven months with Nike her bonus exceeded $65,000.
And this was an annual bonus day like no other. In a normal year, these so-called Performance Sharing Plan (PSP) bonuses are predicated on the company meeting profitability goals. But COVID-19 derailed Nike’s momentum and it lost $790 million in its fourth quarter.
So company leadership decided to jettison the normal formula and award 100% of the bonus to all eligible employees. One employee characterized it as a “goodwill gesture” from new CEO John Donahoe.
In its annual proxy statement, Nike said the goal was to “reward strong pre-pandemic performance and to ensure sustained employee engagement and retention, and drive business results during an unprecedented period of transition.”
Few things sustain your engagement like getting an extra $15,000 in your paycheck.
The company declined to offer additional detail.
For some, the bonus could be a going-away present. Nike divulged last month that it intends to lay off an unspecified number of employees. It has filed notice with the state that at least 500 people will be let go in Oregon.
Bonuses are commonplace among large corporations. In a 2018 survey of mid-to-large publicly-traded companies, more than 84% of the respondents said they pay retention bonuses, spot cash awards (to individuals for notable accomplishments) and annual payments like Nike does.
WorldatWork, a Scottsdale, Ariz.-based professional association for HR and compensation managers, conducted the poll. The bonuses typically range in size from 5.6% and 34% of employees’ salary, it found.
The one-two punch of the coronavirus and recession are making 2020 the leanest year for bonuses since the depth of the Great Recession in 2008 and 2009, according to Mercer Consulting, an authority on compensation, benefits and retirement plan issues.
“All my clients are trying to figure this out,” said Tracy Bean, a manager in Mercer’s Seattle office. “It was COVID-19 that hurt their financial results and made it difficult to impossible to make their goals. It wasn’t anything employees did.”
Brian Yarbrough, a stock analyst who follows Nike for Edward Jones, lauded the decision to pay the full bonuses. It “gives workers some skin in the game.” Plus, it’s a smart play for Donahoe, who replaced Mark Parker in January.
“Donahoe is the new guy, this will help him generate some goodwill,” Yarbrough said.
Donahoe and his fellow executives also participate in the PSP bonus plan. And they too faced severely reduced bonuses or even none at all given the disappointing 2020 results. But the executives also got special dispensation. According to the company’s 2020 proxy statement, the Nike board of directors opted to pay the executives’ discretionary bonuses. They ranged from $1.57 million for Matthew Friend, Nike’s new chief financial officer, to $6.75 million for Donahoe.
Donahoe’s $6.75 million bonus was part of a sumptuous compensation package Nike valued at more than $53 million.
It’s not just employees who look forward to Nike bonus day. So do area car dealers, Realtors, and retailers. Romano Boiciuk, general manager of Mercedes Benz of Beaverton, said it’s always good to see Nike employees stroll onto his lot.
“As far as I’m concerned, most of these Nike employees don’t need to wait for their annual bonus,” Boiciuk said. “They can buy a Mercedes any time they want. I look at how much money they make, and I think geez, I’m in the wrong business.”
The Link LonkAugust 18, 2020 at 11:05PM
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The $15,000 paycheck: Annual bonus day helps ease the pain at Nike - oregonlive.com
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