We’ve blogged before about studies showing executive pay actions in response to the pandemic. Recently, CG Lytics, the data service provider to Glass Lewis for the proxy advisor’s say-on-pay recommendations, issued a report summarizing COVID-related pay actions by Russell 3000 companies. For companies in hard-hit sectors that are interested in conserving cash, the report offered this bold, albeit potentially unrealistic, suggestion:
If CEOs in hard-hit businesses would like to help their companies save cash and support employees, bigger sacrifices, such as returning part of their compensation packages or taking bonus cuts and reductions in other short-term cash incentives, may be impactful.
The report presents high-level data about pay cuts and adjustments to incentive plans by sector. The data is generally consistent with prior reports and shows most actions have been by companies in the consumer discretionary and industrials sectors. For companies that made base salary cuts in response to challenges from the pandemic, CG Lytics characterizes these actions as “window dressing” as it notes that base salary is commonly only a small fraction of compensation packages.
-Lynn Jokela, CompensationStandards.com February 18, 2021
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