Rethinking Equity Compensation in Response to COVID-19: Addressing Outstanding Grants



The COVID-19 pandemic, along with the economic slowdown created in its path, is a having a severe impact on company performance to-date in 2020. Most companies — though not all — are currently underperforming against their financial forecasts for the year, many businesses have shut down significant portions of their operations, and some firms have even filed for bankruptcy. Adding to the challenge is the fact that we don’t know when this crisis will end, making it very difficult to develop reliable business plans for the remainder of the year.

Yet, despite these challenges, companies must continue to look forward. Employees must be paid, retained and motivated, and the mission of seeking new clients and revenue must go on to ensure long-term business success. As more firms move from reacting and responding to the immediate crisis, to recovery and stabilization, and ultimately to reshaping themselves for the future, a rare opportunity to rethink and reevaluate total rewards strategies exists.  

We believe companies should take a holistic approach to this opportunity, which is especially true for equity compensation. Equity awards pose unique complexities that cash compensation does not — from accounting and regulatory rules to managing the impact of market volatility.

To help compensation and HR professionals rethink their equity compensation plans in this new environment, we address considerations to outstanding grants in this article. In follow-up articles, we will examine considerations for upcoming grants and developing a communications strategy around your equity plans.

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