COVID-19 has wreaked havoc on the markets and also shined a spotlight on a hot governance topic this time of year: CEO pay packages. In a climate of widespread layoffs and furloughs, some CEOs – including those at Marriott International, Santander Bank, Delta Airlines and General Electric – have foregone or cut their salary and encouraged their executive team to do the same, demonstrating their commitment to their stakeholder base as well as to safeguarding the future of their business. But others continue to get their payouts, even while their stock price and industry suffers, as Bloomberg Opinion's Liam Denning points out in his article on E&P CEOs.
Meanwhile, the market dislocation and turbulence have prompted companies to dust off defense measures such as shareholder rights plans. Historically unpopular with proxy advisory firms (and predatory buyers), more companies are expected to implement these so-called poison pills as valuations drop and market volatility spikes. Citigroup’s Global Co-Head of M&A, Mark Shafir, told CNBC’s David Faber that he’s expecting the uptick in poison pills to come in the form of short duration plans (seen as more shareholder-friendly) and, in addition, he expects to see more stock-for-stock takeover offers given the sharp drop in share prices
Finally, Gladstone Place Partners published a thought piece last week that highlighted best practices for companies responding to COVID-19. Companies and their leaders need to address how they adjust their approach to earnings guidance, stock buybacks, and annual meetings. This week, law firm Wachtell, Lipton, Rosen & Katz released a note that covered similar ground and outlined what the U.S. SEC spelled out on Wednesday as its recommended guidance on disclosure around COVID-19.
Stay healthy,
Mike and Gabriella
