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COVID-19: Considerations for 2020 Incentive Compensation Programs

The coronavirus (COVID-19) pandemic and the ensuing market uncertainty, as well as recently enacted legislation, have upended the compensation and benefit programs of many companies. These two memos are the first in a series of memos that will discuss considerations for companies to keep in mind in connection with their short- and long-term incentive compensation programs.

The first memo highlights key issues for companies that have yet to finalize their 2020 incentive compensation programs.  In the second memo, we identify issues for companies that have already granted their incentive compensation for 2020, including whether or not to revise performance criteria and/or goals now and other alternatives that companies may wish to consider.
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SEC Staff Updates Its Guidance on Shareholder Meetings & COVID-19

The SEC Staff updated today its prior March 13, 2020 guidance relating to shareholder meetings, including virtual meetings. You may recall that the Staff’s March guidance provided welcome clarity to issuers that previously mailed and filed their proxy materials, but who wish to change the date, time or location of their meetings, allowing them to essentially issue a press release and file that on EDGAR without needing to remail all materials.

The SEC updated this guidance today to make two key changes:

  • The above relief now applies to special meetings; and
  • Issuers encountering delays because of difficulties in printing or mailing full-set proxy materials may avail themselves of the “notice-only” delivery option even if such issuer is unable to send the notice of electronic availability of proxy materials 40 calendar days before its meeting as required by Rule 14a-16, if such “delays are unavoidable due to COVID-19”.

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Glass Lewis Outlook on COVID-19’s Impact on the Present and Future of Governance for Boards and Companies

Glass Lewis (GL) shared last Thursday more of its perspective and outlook of the effect that the coronavirus (COVID-19) pandemic may have on corporate governance for the 2020 proxy season. GL explains that it is issuing further updates because “it is important to provide the market with certainty and transparency on [GL’s] established approach” given that it believes that all governance issues and most proposal types will be impacted by the pandemic. Anticipating that the pandemic will continue for up to 18 months, GL states that the proxy advisor is monitoring the markets; the sentiments of institutional investors and shareholder proponents; disclosures by public companies; and the approaches and actions of public companies.
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Davis Polk Client Alert: Families First Coronavirus Response Act: Key Takeaways Regarding Paid Leave Benefits

On March 18, 2020, Congress passed the Families First Coronavirus Response Act (“FFCRA”), a sweeping legislative bill to address the growing concerns surrounding the novel coronavirus, COVID-19. The FFCRA includes measures aimed at expanding paid employee leave in connection with the coronavirus emergency and providing employers with tax credits to cover the cost of those benefits

Read the full alert here.

Law Clerk Elizabeth Smith contributed to this publication.
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