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Marsh & McLennan Cos. Inc. is looking to other options rather than pay cuts to keep on top of expenses during the COVID-19 pandemic, but its bonus pool may shrink, the firm’s top executive said Thursday.
Speaking on the company’s first-quarter earnings call with analysts, Dan Glaser, March & McLennan’s president and CEO, said, “We’ve got many different levers on the expense side at our disposal,” such as cutting travel and entertainment expenses and reducing the firm’s bonus pool to protect earnings.
“To us, salary reductions and things like dividend cuts are levers to protect liquidity. It’s kind of like survival mode stuff, and we would look to other actions,” he said.
Aon PLC, Marsh & McLennan’s main rival, announced on Monday that it would cut the pay of most of its staff by 20%.
Marsh & McLennan has already looked to ways to protect the firm’s liquidity, Mr. Glaser said. The firm recently established a $1 billion credit facility.
“As we saw in the financial crisis, there was a slowdown in the collection cycle, but it was temporary. So solving that issue by reducing pay is an awfully blunt instrument and it can have lasting implications, starting with the notion of battering trust with your colleague base by challenging them when they are in this difficult period,” Mr. Glaser said.
Marsh & McLennan had previously pledged not to make job cuts related to the pandemic.
Executives at Willis Towers Watson PLC, which is being acquired by Aon, also signaled on Thursday that it will seek to avoid making pay cuts.
More insurance and risk management news on the coronavirus crisis here.