Tag: COVID-19

The Week in GRC

The Wall Street Journal reported that, according to data provider MyLogIQ, 87 percent of companies in the S&P 500 opted for a virtual AGM this year compared with 23 percent of meetings held remotely in 2019. Companies are finding virtual AGMs to be cheaper and less time-consuming, but some shareholders complain they don’t get as much time to ask their questions.

Remote investor events held by companies in the S&P 500 this year ran for an average of 32 minutes, seven minutes shorter than in-person shareholder meetings in 2019, according to a recent study of more than 90 annual meetings by the Hebrew University of Jerusalem. Executives allocated less time for business updates and for answering shareholders’ questions compared with in-person meetings in 2019, the study noted.

– TikTok said it planned to file a lawsuit on Monday against US President Donald Trump’s executive order prohibiting transactions with the short video app and its Chinese parent ByteDance, Reuters reported. TikTok said it had tried to engage with the US administration for nearly a year but faced ‘a lack of due process’ and that the government paid no attention to the facts.

The Week in Investor Relations

The Wall Street Journal (paywall) reported that, according to data provider MyLogIQ, 87 percent of companies in the S&P 500 opted for a virtual AGM this year compared with 23 percent of meetings held remotely in 2019. Companies are finding virtual AGMs to be cheaper and less time-consuming, but some shareholders complain they don’t get as… Continue reading The Week in Investor Relations

Shareholders Feel Muted as Companies Switch to Virtual Annual Meetings

Companies are finding virtual shareholder meetings to be cheaper and less time-consuming, but shareholders complain they don’t get as much time to ask their questions.

A majority of the companies in the S&P 500 this year have decided to move their shareholder meeting—usually an in-person event—online due to coronavirus-related restrictions on large gatherings. Faced with the option to postpone the meeting until later, 87% of businesses opted for a virtual event compared with 23% of meetings held remotely in 2019, according to data provider MyLogIQ.

Executives and investors usually like that they can dial into these meetings from their homes. But despite the ease of access, shareholders say remote events offer less scope for participation as many companies ask for questions in advance, respond only to a select number of them and don’t disclose how many queries were received.

Finance Chiefs Are on the Move as Pandemic Adds Strain

Finance chiefs are changing jobs again after a slowdown in exits and recruitment in thespring, as the pandemic is forcing them to rethink their business models and adding to an already high workload.

Three big public companies this week said their CFO would exit. General Motors Co.’s Dhivya Suryadevara is joining Stripe Inc., while Kelly Kramer, the finance chief of Cisco Systems Inc., plans to retire. Avis Budget Group Inc. on Thursday said finance chief John F. North III would exit the company to pursue other interests.

The number of CFO departures at companies in the S&P 500 and Fortune 500 has crept up in recent weeks following a slowdown in the spring. Eighty finance chiefs left their positions through Aug. 1, compared with 84 at this point last year, according to the Crist|Kolder Volatility Report, which tracks recruitment trends in corporate leadership.

In total last year, 129 CFOs in the S&P 500 and Fortune 500 left their job, buoyed by a strong stock market that made equity compensation more attractive.

Hard Pass From Boards on Pay Increases

As the time of year approaches when many board committees conduct reviews of director compensation, boards are pressing pause on annual increases to cash and equity retainers, and only making small surgical changes to compensation programs if it appears necessary due to leadership transitions.

George Paulin, chairman and CEO of Frederic W. Cook & Co., says he’s conducted at least 10 board compensation reviews for companies in the Fortune 200 in roughly the past month, and generally, “boards are very hesitant to increase their pay.”

“My prognostication on this is that pay will be flat,” says Paulin. “I don’t think there’s going to be much of a year-over-year increase.”

Even in regular times, directors don’t want to be criticized for increasing their pay when company performance has lagged, or in years in which executives don’t get raises or have failed to reach bonus targets. In response, many boards have adopted language in committee charters mandating that the committee tasked with overseeing board compensation conduct an annual review of pay with an independent consultant.

About a Third of Companies Cut Employee Pay in Response to COVID-19, Survey Finds

As bad as the pandemic job losses have been, with around 31 million Americans on unemployment rolls, it could actually have been worse. Some companies have managed to cut their labor costs to save money, without resorting to permanent layoffs — at least so far.

In a recent survey of HR managers, outplacement firm Challenger, Gray & Christmas found that 1 in 3 companies cut employee pay in response to the pandemic.

“Of that group, 55% reported the cuts allowed them to avoid layoffs,” said senior vice president Andy Challenger.

The thinking from these companies, Challenger said, is “we’ll have our team intact, it won’t hurt morale so bad by letting people go.”

Companies Choose Furloughs Over Layoffs to Manage Coronavirus Slowdown

When meat orders from restaurants, hotels and other food-service clients dried up at two of Hormel Foods Corp.’s plants in April, finance chief Jim Sheehan chose to furlough roughly 350 workers, but didn’t lay them off. These furloughed employees didn’t receive pay but got benefits such as health care.

It was a careful calculus. After years of effort to secure talent in a tight labor market, many finance chiefs responding to the shock of the coronavirus pandemic have so far preferred to furlough workers instead of severing ties completely, even if it means spending a little more.

“Our employees are long-term investments for us and they’re a precious resource, so we needed to do what we could,” Mr. Sheehan said.

Other finance chiefs made a similar choice as the coronavirus pandemic shut down businesses across the country. Of the 87 firms in the S&P 500 to announce staff reductions from early March through the end of June, 65 chose to furlough workers, according to an analysis of securities filings by data provider MyLogIQ.

Pandemic Prompts Review of Jet Travel

While many executives continue to work from home, data shows that travel by corporate aircraft and chartered and fractionally owned jet fleets has begun to take off in recent weeks. That trend is likely to continue through 2020 as companies seek to reduce the risk of CEOs’ being exposed to the coronavirus. Accordingly, sources say boards should take a renewed look at corporate aircraft and private jet travel policies.

Meanwhile, the SEC has spent the past several years pursuing enforcement actions stemming from the improper disclosure of executives’ personal use of corporate aircraft, as Agenda has reported, creating a dynamic governance issue that is ripe for scrutiny.

“There has been a lot of pressure in recent years to keep [aircraft perquisite] figures down, so this is a perk that over the years has been in decline, along with country clubs and other things,” says Alan Johnson, CEO of compensation consulting firm Johnson Associates. “But I think the long-lasting implications of the pandemic are going to change everything. There’s business use of the planes, which is going to accelerate dramatically because there are fewer commercial flights … this is a different world.”