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The measure affects senior executives, management and salaried employees.
Employees covered by Caterpillar's short-term incentive plans will not receive a STIP payout for the 2020 plan year either.
That includes the annual incentive plan for Caterpillar's executive officers.
A Caterpillar spokeswoman said these were among the efforts the company was taking to reduce costs across the board.
"These decisions are difficult and were not made lightly, but we must act with a sense of urgency to respond to this extremely challenging situation created by the pandemic," she said.
On March 26 Caterpillar said the COVID-19 pandemic was having an impact on its supply chain.
It told the New York Stock Exchange it was monitoring the situation closely and supply chain teams had been executing business continuity plans.
Those plans included being alert to potential short supply situations, and, if necessary, using alternative sources and/or air freight; redirecting orders to other distribution centres, and prioritising the redistribution of the most impactful parts.
"Caterpillar is committed to continuing to execute these plans and will remain in close contact with its supply chain to monitor future possible implications, especially on production facilities," the company said.
The company also announced it would suspend operations at some facilities, but would not say which, and that it was also reducing its 2020 guidance.
While the pay and incentive plan actions are a major step, it is not as big as the headcount reductions Caterpillar made in response to the global financial crisis.
In 2009 senior executives were being asked to take leave without pay.
So far there have not been any suggestions of Caterpillar taking such steps again, although, the COVID-19 pandemic's economic effects are still being realised.
