Since March 2020, the worldwide pandemic has derailed expectations for businesses and their employees with respect to everything from how to continue or adapt operations to how to keep employees safe. While the past few months have been unprecedented, the future seems to be just as unpredictable. Having an engaged and committed executive team may be the key to a company’s survival and recovery. In light of this situation, companies must strategize as to how to conduct business while adapting executive compensation programs in light of current circumstances.
Several factors come into play when addressing executive compensation in the midst of a crisis. On one hand, the COVID-19 pandemic has caused companies to experience the depletion of cash as a result of negative impacts on operations which has led some companies to furlough employees and reduce compensation packages and others to freeze compensation altogether. On the other hand, now more than ever, some companies may need to retain and incentivize top talent. Some companies may not only be surviving, but thriving, as a result of new demands for their businesses and services, especially those deemed “essential businesses.” While there is no one-size-fits-all approach for handling executive compensation, it is important to understand the legal ramifications for any modification of executive compensation programs to account for the current climate.
Legal Considerations for Compensation Adjustments
- Reductions in Executive Pay
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