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The COVID-19 pandemic has pushed healthcare leaders to rethink just about every aspect of their operations—even how they pay people.

Several investor-owned healthcare companies have reformulated how they calculate their biggest category of executive compensation: long-term incentive plans. Compensation experts say the crisis has accelerated the shift toward a form of stock award that retains value even during volatility and only pays out if executives stick around. And with financial results more up in the air, some have eased up on the use of performance goals.

Some companies added flexibility into how they interpreted their 2020 plans that had already been in place when the pandemic struck.

Bill Dixon, a managing director with compensation consultancy Pearl Meyer, said the most notable compensation change he observed coming from the pandemic was the injection of discretion into existing packages—in some cases issuing awards where plans as outlined in proxies would not have done so.

"Because of the challenges we faced and our ability to overcome that and stay healthy financially, the board used discretion more this year than in any time we've seen previously, even during the recession," Dixon said.

Dixon said he views that as applying good judgment when the goals that were set pre-pandemic suddenly became irrelevant. Most companies had already set their profit, performance, and patient experience goals by the time the pandemic hit in March, he said.

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