Since executives, compensation committee members and executive compensation professionals began to recognize the havoc wreaked by COVID-19 on the performance targets and metrics they established before the breakout of the pandemic (which now seem to be meaningless and wholly unattainable), one of the most common topics of discussion has been what to do. However, it is not accurate to say that, like the weather, everybody talks about it, but nobody does anything about it.* In fact, nearly all companies have discussed the matter, and many have taken formal action to adjust their performance targets or metrics in order to give executives a realistic (and motivating) possibility of actually receiving a payout.
To help clients evaluate potential changes they are considering, by comparing them to what other companies have done, we prepared (and maintain) a chart showing the SEC disclosures made by most** of the companies that have made changes to their short- and long-term incentive plan performance targets or metrics since March/COVID. The chart includes a column showing the rationale disclosed by the company, if any, for the changes. Most of the disclosures so far are from Forms 8-K. However, several companies (generally fiscal companies filing after the pandemic had begun) have disclosed changes in their proxy statements. Many more are sure to come. Several other companies no doubt have made similar changes, but not filed a Form 8-K, for a variety of reasons (which I may discuss in another post).
We will be updating this chart periodically, as similar filings are made in the future. So, stay tuned.
-Mike Melbinger, CompensationStandards.com July 29, 2020
