As the end of the year approaches, compensation committees are grappling with whether and how to address the impact of the pandemic on incentive awards.

Shareholder support for executive pay remained strong during the 2020 proxy season, with about 2% of companies failing to receive majority support for their pay programs and most companies receiving over 90% support. However, this could change in 2021 if shareholders and proxy advisers object to companies’ decisions to modify in-flight incentive awards where goals have become irrelevant and demotivating. Decisions need to balance fairness to plan participants, alignment with shareholder interests, and consistency with broader workforce actions. In some cases, it may be more appropriate to let awards play out as originally designed despite the challenging circumstances.

 

Download the full article to discover the guiding principles and action steps for companies considering incentive plan changes such as modifying goals, exercising positive discretion, and granting special awards.

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