Aon (NYSE:AON) stock slips 1.1% after Evercore ISI analyst David Motemaden downgrades the stock to Underperform from In Line as he sees the company's unique challenges over the past 1 1/2 years and lack of idiosyncratic drivers resulting in stock underperformance in 2022.
Recall that Aon (AON) ended in July its deal to acquire Willis Towers Watson (NASDAQ:WLTW) after failing to reach an agreement with the U.S. Justice Department over antitrust issues.
Two announced retention packages imply that comp expenses could be elevated and hurt organic growth. "This comes after AON (AON) announced a 20% base salary cut for 70% of its staff and a 50% cut for its top management during the pandemic which was later abandoned and we think hurt trust with employees," Motemaden writes in a note to clients.
The retention packages sought to address a tenuous period, before the failed Willis Towers Watson deal, in which "AON employees would have been bypassed for WLTW personnel," Motemaden said. This came at a time when peers Marsh & McLennan (NYSE:MMC) and A.J. Gallagher (NYSE:AJG) went on the offensive hiring talent and adding capabilities to bolster competitive position, he added.