Principal Financial cuts pay for 23% of global workforce due to COVID-19 impact

Paychecks for nearly a quarter of Principal Financial Group's employees will be smaller, the giant Des Moines-based investment and retirement services company said Tuesday.

Principal said it's cutting salaries for 23% of its global workforce to "mitigate and manage" the economic and market fallout from COVID-19. Principal employs about 18,000 people worldwide and 6,500 in Iowa.

Principal said the pay reductions range from 7.5% to 25%, depending on the employee's role. It didn't immediately indicate how long the reductions would last.

Principal is the second large metro Des Moines employer to announce pay cuts. Meredith Corp, a multimedia company with headquarters in Des Moines, said in April it would temporarily reduce pay for 60% of its employees due to a decline in advertising revenue caused by the COVID-19 pandemic.

The public health crisis has hammered markets and economies worldwide. The S&P 500 stock index, which includes Principal, decreased nearly 20% in the first quarter, Principal noted in a call last month with analysts to discuss its earnings.

Principal said first-quarter income fell nearly 33% to $288.9 million compared to the same quarter a year earlier, and assets under management declined 6.6% to $631 billion. Still, the company said it entered the pandemic in a strong financial position, with $3 billion in cash and liquid assets.

Jane Slusark, Principal spokeswoman, said the company has cut "non-people related expenses." But "due to persisting economic conditions and uncertainty," she said, Principal is now taking additional measures to keep "expenses in line with expected revenues."

"Compensation reductions will impact select employee populations," including the company's nine directors, CEO Dan Houston and its 29-member senior leadership team, Slusark said in an email.

In addition to pay cuts, the company is asking some U.S. workers if they're interested in moving to part-time employment. The shift would be voluntary, Slusark said.

Principal said the company will continue a temporary pay policy for hourly workers who may have their schedules impacted by COVID-19. "These employees are not required to take paid time-off or go unpaid if they are unable to work their full schedule due to COVID-19 disruptions" such as difficulties with child care, Slusark said.

Slusark said Principal is not laying off workers as a result of the economic impact from the coronavirus.

Meredith, which owns TV stations and publishes magazines including People, Better Homes & Gardens and InStyle, said its employee pay reductions would begin May 4 and last through Sept. 4.

About 45% of Meredith employees are seeing a 15% pay cut. The highest-paid 15% of employees will have their pay reduced from 20% to 40%. Employees taking a pay cut will have one paid day off each week.

The company said this month it lost $284 million in the third quarter, with revenue declining 6% to $702 million.

Donnelle Eller covers agriculture, the environment and energy for the Register. Reach her at deller@registermedia.com or 515-284-8457. 

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