trends in investor communications compensation committee … committee... · 2020. 12. 8. ·...

Trends in Investor Communications

Compensation Committee Discretion in Light of COVID-19

In This

Thought PieceCOVID-19 has had a major impact on business activities around the world. From operations to revenue, companies saw strategies upended – or in some cases accelerated – by the pandemic.

In light of these unprecedented circumstances, company leaders are working diligently to protect employees, customers and other stakeholders, while Compensation Committees are considering whether annual and long-term compensation plans should be modified to reflect the very real impacts of COVID-19.

In this Thought Piece, we look at how companies are using proxy statements to present changes to compensation programs driven by COVID-19.

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La-Z Boy 4 Royal Gold 16

AAR Corp. 7 Omnicom Group 16

Tailored Brands 9 Foot Locker 16

Paylocity 10 Delta Airlines 17

FedEx 11 United Airlines 18

Mastercard 12 Cardinal Health 20

Wex Inc. 13 Fox 21

Callon Petroleum 14 Marriott International 22

Iron Mountain 14 Bed Bath & Beyond Inc. 23

McDonald’s 15

Other Disclosures

MetLife 24 Dell Technologies 27

General Motors 24 TJX Companies 27

Comcast 25 General Mills 28

Visteon Corporation 25 Freeport-McMoRan 28

Macy’s 26 Nordstrom 29

Salesforce 26 Booking Holdings 29

Contents

4 Trends in Investor Communications

La-Z Boy 2020 Proxy Statement

La-Z Boy provides comprehensive disclosures regarding the key changes to their executive compensation program for FY 2020 and FY 2021; one of the actions that the company has taken in order to mitigate the impacts of COVID-19 to their business.

SAY ON PAY OUTCOME95%

PAY-FOR-PERFORMANCE OVERVIEW - 2020 MIP o https://lazboy.gcs-web.com/static-files/881c0311-538d-4aba-be75-feb2150b3aaf

KEY EXECUTIVE COMPENSATION PROGRAM CHANGES FOR FY 2020

https://lazboy.gcs-web.com/static-files/881c0311-538d-4aba-be75-feb2150b3aaf

5Compensation Committee Discretion in Light of COVID-19

KEY EXECUTIVE COMPENSATION PROGRAM CHANGES FOR FY 2021

SALARY CHANGES IN FY 2020

PAY-FOR-PERFORMANCE LINKAGE — FY 2020 MIP PAYOUTS WERE BELOW TARGET, REFLECTING THE IMPACT OF THE COVID-19 PANDEMIC


FY 2020 MIP PERFORMANCE RESULTS


AAR Corp. 2020 Proxy Statement

AAR Corp. details their “cost reduction measures during Fiscal 2020” in response to “a changing market environment” caused by the COVID-19 crisis. Furthermore, the company discloses that the pandemic “had a dramatic impact on the Company’s fourth quarter financial results” which led them to reduce aspects of their executive compensation.


EXECUTIVE COMPENSATION HIGHLIGHTS – FISCAL 2020 CHANGES TO OUR EXECUTIVE COMPENSATION PROGRAM o http://investors.aarcorp.com/static-files/a9f6f105-bad8-4aa4-b11f-13b2298be099

OUR COMPENSATION COMMITTEE’S DECISION-MAKING PROCESS

FISCAL 2020 SHORT-TERM INCENTIVE PLAN – SETTING TARGETS

http://investors.aarcorp.com/static-files/a9f6f105-bad8-4aa4-b11f-13b2298be099


FISCAL 2020 SHORT-TERM INCENTIVE PLAN – APPROVING PAYOUTS

PERFORMANCE-BASED RESTRICTED STOCK – APPROVING PAYOUTS


Tailored Brands 2020 Proxy Statement

Tailored Brands details how the COVID-19 pandemic affected the business and its financial performance, prompting significant changes to 2020 compensation decisions, including a statement that the company “did not believe it would be appropriate to make equity or other grants while so many employees are furloughed.”

SAY ON PAY OUTCOME88.7%

COMPENSATION CHANGES RELATED TO COVID-19 o https://ir.tailoredbrands.com/proxy-statements/content/0001206774-20-001635/0001206774-20-001635.pdf

EXECUTIVE SUMMARY – RESPONSE TO COVID-19

EXECUTIVE SUMMARY – PAY FOR PERFORMANCE

https://ir.tailoredbrands.com/proxy-statements/content/0001206774-20-001635/0001206774-20-001635.pdf


Paylocity 2021 Proxy Statement

Paylocity presents that due to the impact of COVID-19 pandemic, “the Committee determined not to increase base salary and maintained the same base salary of each of [their] named executive officers.” Moreover, the company details their compensation decisions for FY 2021.


BASE COMPENSATION o https://investors.paylocity.com/static-files/394c70a9-ffae-48b1-9680-9f41b363450b

FISCAL 2021 COMPENSATION DECISIONS

https://investors.paylocity.com/static-files/394c70a9-ffae-48b1-9680-9f41b363450b


FedEx 2020 Proxy Statement

For FedEx, the COVID-19 pandemic caused a revenue shortfall. As a result, “there were no payouts under the fiscal 2020 AIC program to any named executive officers.” The company presents an alternative compensation plan in order to “retain and motivate executive officers during this period of economic and business uncertainty.”


FISCAL 2020 AIC PERFORMANCE AND PAYOUTS o https://s1.q4cdn.com/714383399/files/doc_financials/annual/2020/371822(1)_11_FedEx_NPS_WR.pdf

https://s1.q4cdn.com/714383399/files/doc_financials/annual/2020/371822(1)_11_FedEx_NPS_WR.pdf


Mastercard 2020 Proxy Statement

Mastercard’s Human Resources and Compensation Committee (HRCC), approved pay actions before the outbreak of COVID-19. In addition, the company discloses that “the HRCC approved an increase to the annual base salaries” of some of their executive officers and that “the base salaries for the other NEOs, including the CEO, remain unchanged.”


2020 COMPENSATION DECISIONS o https://s2.q4cdn.com/242125233/files/doc_financials/2019/ar/2020-Proxy-Statement.pdf

https://s2.q4cdn.com/242125233/files/doc_financials/2019/ar/2020-Proxy-Statement.pdf


Wex Inc. 2020 Proxy Statement

Wex emphasizes that compensation decisions and resulting payments were made before the COVID-19 outbreak. However, the company notes that their “Board has the authority to make adjustments to performance awards” should unusual or non-recurring events affect the company or the company’s financial statements.


PAY MIX o https://s25.q4cdn.com/271095801/files/doc_financials/2019/ar/b62c96e2-3441-4d14-ba76-fe364768e1b2.pdf

https://s25.q4cdn.com/271095801/files/doc_financials/2019/ar/b62c96e2-3441-4d14-ba76-fe364768e1b2.pdf


Callon Petroleum 2020 Proxy Statement

Callon Petroleum presents the proactive steps taken to realign the company’s executive compensation program with the current macroeconomic outlook changed by COVID-19. The company details their “cost-effective measures including voluntary compensation reductions.”


EXECUTIVE COMPENSATION o https://www.callon.com/investors/sec-filings/all-sec-filings/content/0000928022-20-000063/0000928022-20-000063.pdf

Iron Mountain 2020 Proxy Statement

Iron Mountain’s 2020 performance targets were established before the COVID-19 outbreak. Moreover, the company notes that their “Compensation Committee may exercise its discretion to adjust the 2020 performance targets as appropriate” based on their assessment of the “potential impact of COVID-19 pandemic to the Company’s performance and business operations.”


2020 PERFORMANCE TARGETS - CHANGES TO 2020 COMPENSATION PROGRAM o https://d18rn0p25nwr6d.cloudfront.net/CIK-0001020569/f8e02111-7232-4f44-9e82-299a36be231c.pdf

https://www.callon.com/investors/sec-filings/all-sec-filings/content/0000928022-20-000063/0000928022-20-000063.pdfhttps://www.callon.com/investors/sec-filings/all-sec-filings/content/0000928022-20-000063/0000928022-20-000063.pdfhttps://d18rn0p25nwr6d.cloudfront.net/CIK-0001020569/f8e02111-7232-4f44-9e82-299a36be231c.pdf


McDonald’s 2020 Proxy Statement

McDonald’s discloses that the COVID-19 pandemic has disrupted operations and unfavorably impacted financial results. As a result, “2020 performance-based compensation will be negatively impacted.” However, the company notes that “the Compensation Committee’s long-standing principles will guide its decision-making process.”


PERFORMANCE-BASED COMPENSATION – EXECUTIVE COMPENSATION HIGHLIGHTS o https://corporate.mcdonalds.com/content/dam/gwscorp/nfl/investor-relations-content/company-overview/2020_proxy.pdf

https://corporate.mcdonalds.com/content/dam/gwscorp/nfl/investor-relations-content/company-overview/2020_proxy.pdfhttps://corporate.mcdonalds.com/content/dam/gwscorp/nfl/investor-relations-content/company-overview/2020_proxy.pdf


Royal Gold 2020 Proxy Statement

Royal Gold presents that some of their Named Executive Officers received discretionary cash bonus for their performance during the COVID-19 pandemic.


SHORT-TERM INCENTIVE AWARDS AND DISCRETIONARY BONUSES o https://www.royalgold.com/media/uivlzlzj/royal-gold-2020-proxy-statement.pdf

Omnicom Group 2020 Proxy Statement

In light of the COVID-19 pandemic, Omnicom Group’s CEO and the Compensation Committee reached an agreement “that the cash portion of the Incentive Awards for 2019 will be paid at a later date during 2020.”


ADJUSTMENTS TO CALCULATED INCENTIVE AWARDS o http://d18rn0p25nwr6d.cloudfront.net/CIK-0000029989/f60a3f99-c591-4bd3-866c-976a88d45d72.pdf

Foot Locker 2020 Proxy Statement

Foot Locker discloses that all payments under their Annual Incentive Plan in respect of 2019 performance have been delayed due to the financial impact of COVID-19.


ANNUAL INCENTIVE PLAN o https://www.footlocker-inc.com/content/dam/flincfoundation/footlockerinc_documents/annual-reports/Foot%20Locker%202020%20Proxy%20FINAL.pdf

https://www.footlocker-inc.com/content/dam/flincfoundation/footlockerinc_documents/annual-reports/Foot Locker 2020 Proxy FINAL.pdfhttps://www.footlocker-inc.com/content/dam/flincfoundation/footlockerinc_documents/annual-reports/Foot Locker 2020 Proxy FINAL.pdfhttps://www.royalgold.com/media/uivlzlzj/royal-gold-2020-proxy-statement.pdfhttp://d18rn0p25nwr6d.cloudfront.net/CIK-0000029989/f60a3f99-c591-4bd3-866c-976a88d45d72.pdf


Delta Airlines 2020 Proxy Statement

The Chairman of the Personnel and Compensation Committee presents actions taken by the Committee as COVID-19 dealt a “devastating blow” to the business. In addition, the company also discloses that long-term executive compensation has “declined by more than half of its grant date value.” Moreover, Delta acknowledges that the crisis will affect the company over a longer term, hence, “in coming months, [the Personnel and Compensation Committee] will need to reevaluate incentive plans.”


NOTE FROM CHAIRMAN OF THE PERSONAL & COMPENSATION COMMITTEE – EXECUTIVE COMPENSATION o https://s2.q4cdn.com/181345880/files/doc_downloads/2020/04/Delta-2020-Proxy-Statement.pdf

https://s2.q4cdn.com/181345880/files/doc_downloads/2020/04/Delta-2020-Proxy-Statement.pdf


United Airlines 2020 Proxy Statement

In consideration of the impact of COVID-19 on the business, several of United’s executive officers, as well as all their officers and non-employee directors volunteered for a compensation reduction.


COMPENSATION DISCUSSION ANALYSIS – EXECUTIVE COMPENSATION o https://ir.united.com/static-files/1be0bf76-8459-4364-8e2b-acccb0232242

https://ir.united.com/static-files/1be0bf76-8459-4364-8e2b-acccb0232242


CASH RETAINERS FOR BOARD AND COMMITTEE SERVICE


Cardinal Health 2020 Proxy Statement

Cardinal Health discloses that annual incentive performance goals/results remain unchanged despite the negative impact of COVID-19.


ANNUAL INCENTIVE COMPENSATION – FISCAL 2020 GOAL SETTING AND RESULTS

o http://d18rn0p25nwr6d.cloudfront.net/CIK-0000721371/d6b2521e-a2c7-4576-9fe7-d009c32ac596.pdf

http://d18rn0p25nwr6d.cloudfront.net/CIK-0000721371/d6b2521e-a2c7-4576-9fe7-d009c32ac596.pdf


Fox 2020 Proxy Statement

Fox acknowledges the potential impact of the COVID-19 pandemic on their stakeholders; hence, the company has taken measures to protect the business. Initiatives include “voluntarily base salary reductions” for named executive officers and voluntary suspension of any increase in the compensation of non-executive directors for fiscal 2021. Moreover, the company details that despite the unforeseen impact of pandemic, the company’s compensation program remains unchanged.


EXECUTIVE AND COMPENSATION COMMITTEE RESPONSE TO COVID-19 o https://investor.foxcorporation.com/static-files/18be1c81-3527-4403-bd41-81151e896dd1

https://investor.foxcorporation.com/static-files/18be1c81-3527-4403-bd41-81151e896dd1


Marriott International 2020 Proxy Statement

Marriott explains how the “rapidly evolving COVID-19 pandemic” affected compensation decisions for named executive officers and directors; emphasizing that this is one of the company’s “numerous initiatives to mitigate” the impacts of the pandemic.


BASE SALARY FOR 2020 o https://marriott.gcs-web.com/static-files/a933da9c-2963-4af1-9e88-8855233ff610

DIRECTOR COMPENSATION

https://marriott.gcs-web.com/static-files/a933da9c-2963-4af1-9e88-8855233ff610


Bed Bath & Beyond Inc. 2020 Proxy Statement

Bed Bath & Beyond discloses that executives agreed to “temporary executive salary reductions” in response to the uncertainty posed by the COVID-19 pandemic.


TEMPORARY EXECUTIVE SALARY REDUCTIONS o http://bedbathandbeyond.gcs-web.com/static-files/6a6d0250-7bfe-4db7-94a2-3d2a0df51bec

http://bedbathandbeyond.gcs-web.com/static-files/6a6d0250-7bfe-4db7-94a2-3d2a0df51bec


Other DisclosuresMetLife 2020 Proxy Statement


SIGNIFICANCE OF THE COVID-19 PANDEMIC o https://s23.q4cdn.com/579645270/files/doc_financials/2019/ar/2020-MetLife-Proxy.pdf

General Motors 2020 Proxy Statement


NON-EMPLOYEE DIRECTOR COMPENSATION o https://investor.gm.com/static-files/efc074fb-1e59-4083-9215-6e7fb1be3367

https://s23.q4cdn.com/579645270/files/doc_financials/2019/ar/2020-MetLife-Proxy.pdfhttps://investor.gm.com/static-files/efc074fb-1e59-4083-9215-6e7fb1be3367


Comcast 2020 Proxy Statement


COMPENSATION DECISIONS FOR 2019 o https://www.cmcsa.com/static-files/532cd73b-4d8b-4f81-b3a6-dfbd5384dcbd

Visteon Corporation 2020 Proxy Statement


2020 TEMPORARY COMPENSATION ACTIONS o https://investors.visteon.com/static-files/02477c42-ec0b-4636-84d7-bc57fafd02b8

https://www.cmcsa.com/static-files/532cd73b-4d8b-4f81-b3a6-dfbd5384dcbdhttps://investors.visteon.com/static-files/02477c42-ec0b-4636-84d7-bc57fafd02b8


Macy’s 2020 Proxy Statement


COVID-19 o https://www.macysinc.com/investors/sec-filings/all-sec-filings/content/0001104659-20-041904/

0001104659-20-041904.pdf

Salesforce 2020 Proxy Statement


EQUITY AWARD GRANT PRACTICES o https://s23.q4cdn.com/574569502/files/doc_financials/2020/ar/Salesforce-FY-2020-Proxy-Statement.pdf

https://www.macysinc.com/investors/sec-filings/all-sec-filings/content/0001104659-20-041904/0001104659-20-041904.pdfhttps://www.macysinc.com/investors/sec-filings/all-sec-filings/content/0001104659-20-041904/0001104659-20-041904.pdfhttps://s23.q4cdn.com/574569502/files/doc_financials/2020/ar/Salesforce-FY-2020-Proxy-Statement.pdf


Dell Technologies 2020 Proxy Statement


BASE SALARY - INDIVIDUAL COMPENSATION COMPONENTS o https://investors.delltechnologies.com/static-files/a88e0f82-5054-4ea9-ac1e-d0a287aa3dda

TJX Companies 2020 Proxy Statement


INTRODUCTION - COMPENSATION DISCUSSION AND ANALYSIS o https://www.tjx.com/docs/default-source/annual-reports/tjx-2020-proxy-statement.pdf

https://investors.delltechnologies.com/static-files/a88e0f82-5054-4ea9-ac1e-d0a287aa3ddahttps://www.tjx.com/docs/default-source/annual-reports/tjx-2020-proxy-statement.pdf


General Mills 2020 Proxy Statement


ALIGNMENT OF PAY AND PERFORMANCE o https://s22.q4cdn.com/584207745/files/doc_financials/2020/ar/Final-2020-Proxy-Statement-and-Annual-

Report.pdf

Freeport-McMoRan 2020 Proxy Statement


REALIZABLE PAY ANALYSIS o https://s22.q4cdn.com/529358580/files/doc_financials/proxy/FCX_Prox_2020.pdf

https://s22.q4cdn.com/584207745/files/doc_financials/2020/ar/Final-2020-Proxy-Statement-and-Annual-Report.pdfhttps://s22.q4cdn.com/584207745/files/doc_financials/2020/ar/Final-2020-Proxy-Statement-and-Annual-Report.pdfhttps://s22.q4cdn.com/529358580/files/doc_financials/proxy/FCX_Prox_2020.pdf


Nordstrom 2020 Proxy Statement


CHANGES FOR 2020 o https://investor.nordstrom.com/static-files/e8a6f759-966a-4a24-83cc-07ce76a6c7a1

Booking Holdings 2020 Proxy Statement


COVID-19 – COMPENSATION DISCUSSION AND ANALYSIS o https://ir.bookingholdings.com/index.php/static-files/b7a80c8c-4a3b-455d-a29f-f77a30a7c45f

https://investor.nordstrom.com/static-files/e8a6f759-966a-4a24-83cc-07ce76a6c7a1https://ir.bookingholdings.com/index.php/static-files/b7a80c8c-4a3b-455d-a29f-f77a30a7c45f

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trends in investor communications compensation committee … committee... · 2020. 12. 8. ·...

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