Melissa Burek is founding partner, Eric Hosken is a partner, and Bonnie Schindler is a principal at Compensation Advisory Partners. This post is based on a CAP memorandum by Ms. Burek, Mr. Hosken, Ms. Schindler, and Whitney Cook. Related research from the Program on Corporate Governance includes Paying for Long-Term Performance by Lucian Bebchuk and Jesse Fried (discussed on the Forum here).
Compensation Advisory Partners’ analysis of approximately 100 S&P Composite 1500 companies found that annual incentive plan modifications are the most frequent recent executive pay action taken in response to COVID-19. The analysis is part of CAP’s ongoing efforts to track executive compensation and human capital actions related to COVID-19. Forty-two percent of the companies—which have fiscal year ends near September 30 and recently filed their proxies—made COVID-19-related changes to their incentive plans. Of the companies that made incentive changes, 60 percent made annual incentive changes, 14 percent made long-term incentive changes, and 26 percent changed both incentive plans. The most prevalent annual incentive actions were 1) adding or exercising discretion, 2) adding or changing the performance measures, and 3) adjusting the performance period.
Annual incentive changes are the most prevalent actions taken recently by public companies impacted by COVID-19, according to a Compensation Advisory Partners analysis of proxy filings of 101 S&P Composite 1500 companies with fiscal year ends (FYEs) near September 30. The CAP analysis—which is part of our ongoing efforts to track executive compensation and human capital actions related to COVID-19—shows that 42 percent—or 42 companies—made COVID-19-related changes to their executive incentive plans. Of the 42 companies, 60 percent made annual incentive changes, 14 percent made long-term incentive changes, and 26 percent changed both types of plans.
