For companies with May or June compensation committee meetings, they’ll undoubtedly be discussing company responses to COVID-19 and impacts to compensation. A Pearl Meyer blog suggests three high-level comp committee discussion topics dealing with COVID-19:
– Review disclosed actions to date: there’s value in knowing what other companies are doing but know that disclosures may only be the tip of the iceberg
– Start establishing ground rules regarding 2020 short-term incentives: discuss the impact of COVID-19 on the business and incentive plan metrics, including potentially modeling two or three scenarios of full-year effects to the extent possible. If modeling is not practical, the discussion should turn to establishing ground rules for how performance will be evaluated – for example, defining what “good performance” looks like post COVID-19 and how this might translate to potential bonus payouts
– Tee-up a discussion about long-term incentives/equity: Given that in most cases these awards are for multi-year periods, there is no reason to panic just yet. That said, if the impact of COVID-19 is projected to zero out all performance cycles in play, there may be an argument for discussing the potential need for retention awards, who would be eligible to receive them, the amounts, and the optics of such a move
-Lynn Jokela, CompensationStandards.com May 20, 2020
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