Aon says COVID-19 salary cuts 'no longer necessary' to save jobs

Re/insurance broker Aon has decided to end the  previously announced temporary salary reduction on almost three quarters of its staff after assessing the "worst case economic scenarios from this pandemic", but said the 50 percent salary cut on executive officers and board of directors will remain in place.

Earlier in April, the broker announced that nearly 70 percent of its staff will see their salaries cut by approximately 20 percent, while senior management including CEO Greg Case, Christa Davies, Eric Andersen, John Bruno and Tony Goland, as well as the board of directors, will see their pay reduced by 50 percent. The action was taken in an attempt to help the business navigate through the COVID-19 induced economic crisis.

Aon said that based on observations and analysis over the past four months, the 20 percent salary reductions are "no longer necessary to meet the commitment to our 50,000 colleagues that no one at Aon is going to lose their job because of this COVID-19 outbreak".

Effective July 1, Aon will end the temporary 20 percent salary reductions and repay its staff in full, plus an additional 5 percent of the withheld amount to "recognise their personal resilience and dedication to our clients".

“We took decisive action from a position of strength to protect every Aon colleague against the worst case economic scenarios from this pandemic,” said Case, CEO of Aon. “We based our decisions on a set of core principles and a belief that we’d emerge stronger by staying together. We are humbled by the incredible resiliency our colleagues have demonstrated and proud of their dedication to each other, our clients and the firm.”

The broker stated that the decision is unrelated to a near-term change in the firm’s financial performance or expectations and is instead supported by three key factors.

The firm's expected likelihood of worst-case macroeconomic scenarios has decreased significantly.

Second, Aon says, is the "resilience of its core business" despite being impacted.

Finally, the broker highlighted the "strength of our Aon United strategy", which it says has proven effective in challenging times.

The firm believes the overall macroeconomic uncertainty and downside are somewhat less significant than anticipated, and therefore is ending this aspect of its operational flexibility plan.

However, other components of the plan, including expense discipline, pause in share buyback and new merger and acquisition activity, temporary salary reductions of 50 percent for our named executive officers and 50 percent reduction in cash compensation for the Board of Directors, will remain in place at this time.