Semler Brossy's identification and analysis of the 25 Russell 1000 companies that announced changes as of August 7 to their incentive pay programs as a result of COVID-19 generated these noteworthy observations:
- Nearly half of the companies that announced changes were Consumer Discretionary or Information Technology companies.
- Ten companies made changes to current, pending incentive plans.
- About half of the companies announced only annual incentive plan changes; about one-third announced annual and long-term incentive plan changes.
- Annual incentive plan changes (current and going forward) most commonly (64%) consisted of the addition of new metrics, such as cash flow, EBITDA, or strategic/ operational health measures, followed by reduced target or max payout opportunities (36%).
- Of the dozen companies that disclosed long-term incentive plan changes, half switched their PSU design to metrics that are more focused on operational health (e.g., cost reduction) or more easily forecasted, and half granted special awards aimed at retaining or recognizing select NEOs.
The report includes a deep dive on three companies with more extensive pay actions and the detailed data on all of the companies in a reader-friendly tabular format.
See the firm's new "What to Do About Annual Incentive Plans in the Pandemic" and additional resources on our Executive Pay page. This post first appeared in the weekly Society Alert!