Coronavirus Updates

Subscribe to Coronavirus Updates RSS Feed

COVID-19: Reductions in Executive Pay

Recent market volatility due to the coronavirus (COVID-19) pandemic has disrupted many companies’ day-to-day operations resulting in economic hardship that has caused companies to consider or implement various measures to reduce personnel costs, including pay cuts, furloughs and/or layoffs. When implementing such personnel cost-cutting measures, a number of companies have reduced executive pay, including reductions in base salary and bonus opportunities, and some have also reduced director retainers.

This memo summarizes the actions that a number of companies have already taken and provides guidance for companies considering reductions in executive or director pay.

Read the full memo here.

The COVID-19 pandemic and the ensuing market uncertainty, as well as recently enacted legislation, have upended the compensation and benefit programs of many companies.
Continue Reading

COVID-19: Impact on Nonqualified Deferred Compensation Plans

Recent economic instability caused by the coronavirus (COVID-19) pandemic has caused many companies and their employees to suffer economic hardships that do not have a clear end in sight. As a result of ongoing fluctuations in the markets, uncertainty about job security and increased medical and other expenses, people are experiencing a real need for increased liquidity in the short term. Companies that maintain nonqualified deferred compensation plans may be approached by employees seeking to take distributions of deferred compensation from their plan accounts or to cancel or suspend currently outstanding deferral elections under the plan.

The challenge for both companies and their employees is that nonqualified deferred compensation is subject to Section 409A of the Internal Revenue Code, which was designed to prevent the early payment of deferred compensation amounts and often fails to provide needed flexibility in a crisis like we are experiencing today.
Continue Reading

NYSE Rule Temporarily Extends Deadline for Brokers to Send Physical Proxy Materials

On April 23, 2020, the New York Stock Exchange (NYSE) proposed a temporary rule change of NYSE Rule 451(b)(1) with immediate effectiveness that extends the deadline by which NYSE member organizations (typically broker/dealers) under selected circumstances must send physical copies of proxy materials to beneficial owners. In light of delays related to the novel coronavirus (COVID-19) pandemic, the NYSE designed the modification with the intention of helping issuers meet their quorum requirements at shareholder meetings and possibly alleviating the need for adjournments or postponements. The temporary rule change applies only to shareholder meetings scheduled to be held up to and including May 31, 2020.
Continue Reading

World Economic Forum Pledges to Stand By Stakeholders in the COVID-19 Era

The novel coronavirus (COVID-19) pandemic has posed unprecedented health risks and has led to global economic disruptions. The World Economic Forum (WEF), an international organization that fosters public-private cooperation on global, regional and industry agendas, released this month the “Stakeholder Principles in the COVID Era” (Stakeholder Principles) as part of its COVID Action Platform and called businesses to action stating that, during this time of crisis, “[t]he business community’s contribution: [is] to be leaders of responsiveness and stewards of resilience.” In January 2020, the WEF made headlines by issuing its Davos Manifesto 2020, challenging companies to incorporate stakeholders into their corporate purpose, as well as issuing, through its International Business Council (IBC) a draft corporate sustainability disclosure framework, “Towards Common Metrics and Consistent Reporting of Sustainable Value Creation.”
Continue Reading

COVID-19: Addressing Underwater Stock Options and Stock Appreciation Rights

The recent market volatility caused by the coronavirus (COVID-19) pandemic has caused precipitous drops in the stock prices of many companies, reducing the value of outstanding equity awards and potentially jeopardizing the effectiveness of these awards to reward and retain employees.  In particular, some companies may find that the exercise prices of their outstanding options and stock appreciations rights now substantially exceed the company’s current stock price. This memorandum sets forth key considerations for companies in this position and offers possible approaches that may enable companies to continue to retain and incentivize employees amid the ongoing market volatility, while taking into account the reaction from their shareholders and the proxy advisory firms.
Continue Reading

ISS Releases Policy Application Guidance For COVID-19’s Impact

On Wednesday, April 8, 2020, Institutional Shareholder Services Inc. (ISS) issued guidance on voting policies of various corporate governance-related issues that are likely to be implicated by the coronavirus (COVID-19) pandemic during the 2020 proxy season. The guidance does not introduce any new formal policies. Rather, the guidance provides ISS’s perspective on selected market developments and application of several of its existing policies relevant to the U.S. markets. Importantly, the guidance sheds some light on which company-specific and market-specific facts and circumstances are more likely to influence the proxy advisor’s determinations during and following the pandemic.

EXECUTIVE SUMMARY

The guidance makes three points relevant to the U.S.
Continue Reading

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.
Continue Reading

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”.

Continue Reading

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.
Continue Reading

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.
Continue Reading

LexBlog