Impact of Covid-19 on Executive and Director Compensation Russell 3000

Many companies are facing significant challenges developing and implementing compensation programs for 2023 owing to market volatility and continued macroeconomic uncertainty. Retaining your best talent may require adjusting for market volatility.

Economic headwinds and volatile markets have significantly affected fiscal year 2022 (FY22) incentive plan outcomes in the retail sector. This uncertainty has led retailers to evaluate both minor adjustments to and wholesale redesigns of FY23 incentive plans.  

As companies finish the 2022 compensation season and prepare for 2023, we highlight top-of-mind topics for compensation committee members, questions to ask, and related resources.

We have observed several different approaches to manage "burn rates" and preserve share authorizations.

With volatility and rising interest rates, will some performance-based equity awards be worth the greater cost?

When the market faces changes, many boards start considering adjustments to their long-term compensation programs - but sticking to the existing program generally creates more wealth for executives.

In these times of volatile national and global markets, caused by Covid and more recently by Russia’s invasion of Ukraine, companies have tried to delay goal setting while waiting for more certainty. However, these efforts are often futile as the year wears on and certainty continues to be in the future. 

By minimizing discretion, directors give consistent direction to management. They avoid what might be perceived as forgiving poor results and forestall potential criticism from proxy advisory firms.