In "The Sequencing Game Plan for Reinstating Reductions," Pearl Meyer advises management to begin mapping out a plan for reinstating, resuming or restoring COVID-19-prompted pay, benefits and employment changes to review with the board that may include any or all of these aspects depending on the company's facts and circumstances:
- Does it make sense to reinstate base salaries for employees before bringing back furloughed employees?
- What percent of furloughed employees should return before reinstating base salaries?
- Should 401k or ESPP plans, which touch all employees, be restored before base salaries?
- Should base salary reductions for employees be reinstated before executives?
- When should board cash retainers be reestablished?
- Should incentive compensation of any kind, even if small or for retention purposes, be paid before the reinstatement of furloughed employees, 401k and ESPPs, base salaries, etc.?
Suggested planning considerations include experienced and anticipated cost savings and add-backs, timing, and internal/employee and external communications - including investors and proxy advisors.
See also "Issuers Get (Halfway) Back Into Spending, Guidance Game" (Intelligize); "Preparing Your Workforce: How to Avoid Legal Landmines When Bringing Employees Back" (McDermott Will & Emery); our recent reports: CFO Survey Reveals Cost Containment Actions & Plans and "Bonus Plan Messaging Starts Now"; and additional information & resources on our Coronavirus (COVID-19) Resources, Executive Pay and Compensation Committees pages. This post first appeared in the weekly Society Alert!