February 11, 2021 Executive Compensation Resilience Articles

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Setting 2021’s Compensation Goals in the Wake of COVID 2021 forces Boards to raise their incentive game

Setting goals for incentive compensation has long been one of the compensation committee’s biggest responsibilities.

This task is especially difficult with the continuing uncertainty of the COVID-19 pandemic and corporate commitments to serving all stakeholders, not just shareholders.

Compensation committees are asking:

  • What will good performance look like in 2021?
  • Will management know enough at the beginning of the year to set reasonable goals?
  • How volatile might performance outcomes be?
  • What level of discretion might be appropriate to reserve for year-end?
  • Will it be “safe” to set longer-term goals?
  • For companies temporarily boosted by the pandemic, is it appropriate to set 2021’s goals below 2020’s results?
  • How should incentive plan payouts consider the impact on all stakeholders?

View the full article as it was originally published.

Blair Jones

Greg Arnold

This article was originally published in Directors & Boards.

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