March 16, 2020
Addressing COVID-19 for Exec Comp Plans
– Lynn Jokela
COVID-19 is creating plenty of challenges for executive compensation programs. Here are two recent memos, one from Semler Brossy and another from PwC, that discuss some of the implications and approaches companies can take to address the effect of COVID-19 on compensation plans.
– Semler Brossy’s memo notes that the right approach to addressing COVID-19 and executive compensation programs will vary across companies depending on where a company is at in terms of business impact from the virus, incentive plan design and its compensation cycle. The memo then discusses four primary approaches companies have followed to address the effect of COVID-19 on executive compensation programs.
– PwC’s memo provides an overview, focused primarily on possible use of discretion in setting performance targets and when determining incentive awards. The memo provides a list of steps for compensation committees to consider in light of the fast-moving COVID-19 developments. The memo also touches on the issue of possible increased scrutiny if discretion is used and satisfaction of executive stock ownership targets in light of falling share prices.