We use cookies to collect information about how our website is used and to improve the visitor experience. You can change your browser’s cookie settings at any time. Please review our privacy policy for more information. OK
Though the stock market’s tumble amid the ongoing coronavirus pandemic is expected to hit executives’ pay, compensation experts are urging boards to avoid making drastic changes to incentive plans or targets. However, investors may be willing to accept that execs receive some amount of bonus compensation on the other side, sources say.
Most compensation committees have not started having conversations about how the current pandemic will affect incentive pay, according to a poll this month from comp consultancy Pearl Meyer. But compensation professionals are preparing for the fallout when comp committees’ focus turns back to executive pay.
Pearl Meyer polled 233 directors at both public and private companies between March 10 and March 16 and found that 82% of compensation committees had not yet started those discussions, while 13% said they have discussed it and 5% were unsure.
“Results suggest it is too early to gauge the impact on financial plans, goal setting, or future performance,” Pearl Meyer’s “Quick Poll” survey states, noting that some boards are opting to revisit goals later in 2020 to assess whether adjustments are necessary, while some say they will “exclude the impact of coronavirus when evaluating results at the end of the year.”
Peter Lupo, senior managing director and Atlantic region head at Pearl Meyer, says he expects the discussions will take place when comp committees convene for their regularly scheduled meeting to discuss goals around mid-year. Depending on the severity of issues, they could determine to have a special meeting.
In Pearl Meyer’s survey, 95% of respondents say their board is considering the financial impact of the coronavirus or will discuss it at a future meeting. Of the 13% of respondents who said they have specifically held discussions about incentive plans, about 39% expect to revisit the topic later this year, if necessary. Three percent each said that they had temporarily delayed goal-setting or that they had lowered annual or long-term goals to “partly account” for the coronavirus fallout.