AOL's New Pay Plan Leaked

In the past couple weeks, AOL management announced to employees that from now on “salary increases, bonus opportunities, equity awards, spot bonuses, special projects and additional rewards” would be determined based on merit only.

Here’s the memo:

For this year, our philosophy is to reward those who have outstanding performance in 2010. We will focus our compensation philosophy on truly differentiating the best performers at AOL, and we’ll do this in a variety of ways, including: salary increases, bonus opportunities, equity awards, spot bonuses, special projects and additional rewards.  We will be providing a more comprehensive overview of the compensation philosophy for 2010 in the upcoming weeks, but here are some Total Rewards highlights: 

  • 2010 bonus target opportunities are moving back to competitive levels. The best performers – regardless of level – will have the opportunity to receive best bonuses…a true performance based system. 
  • Going forward,  we’ll have an equity (restricted stock and stock options) program designed to reward our best performers across the company.
  • AOL will have a new “Get Fit” program designed to  allow us to be the healthiest company in the world…think exercise, healthy food choices, health assessments, nutrition and health knowledge.  
  • Our workplaces and workspaces will be changing to better match our new culture…look for more changes to our work environment throughout the year. 
  • We’ll provide more investment tools offered for your long-term savings, as well as additional employee discounts and offerings…
  • We’ll offer cutting-edge benefit programs around the globe which mirror our employees’ needs…
  • You’ll receive a Total Rewards Statement with a complete snapshot of your total compensation package from AOL this summer.

This is a change from past practices, and some AOL employees are upset. In fact, one source tells us there’s something of a conspiracy theory going around among the old-timers:

People now think that Tim is doing all of this so people will leave — so he does not have to fire people. They he will not man up  and simply say it [so] instead he sends these happy emails.  He is killing them with vagueness, with hopes people will get frustrated a leave.

Among AOL employees newer to the company, the reaction to the new compensation has been more like a shrug. Merit-based pay seems plenty fair to us.

Don’t miss: Meet the Googlers running AOL →

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