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The Wall Street Journal

US Companies Revamp Bonus Plans as Pandemic Upends Forecasts

Companies are revising their plans for bonuses and other incentive compensation as the coronavirus pandemic upended financial forecasts and executives managed through a once-in-a-lifetime economic downturn.

The pandemic has had a disparate effect on companies’ balance sheets, leading to soaring profits in some industries, such as online retail and groceries, and steep losses in others, for example hospitality and travel.

Over a quarter of large US businesses initially reduced executive salaries in the spring, but they were temporary, as many companies restored manager salaries in recent months. Now, as companies are getting ready to pay out bonuses and other rewards for the past year, boards are contemplating whether it makes sense to assess executives based on goals and targets that were put in place in late 2019 and early 2020, when the outlook for their business was very different.

Most listed companies will provide details about executive compensation in 2020 when they file their proxy statements ahead of their annual meetings this year. In a sample of filings from 132 companies whose fiscal year ended before the calendar year, 89% said they revised at least one element of their short- or long-term incentive plans for 2020 or 2021, said Jannice Koors, a senior managing director and Western region president at executive compensation advisory firm Pearl Meyer.

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