Leaders who do not reduce their base pay, defer salary, exchange cash wages or equity, or forgo bonuses put their organization’s reputation at risk, according to the Wall Street Journal.
Investors, index funds and proxy advisory firms have a watchful eye on how boards of public companies handle this crisis. “At a time when many investors are putting greater emphasis on environmental, social and governance considerations, perceived missteps could do companies more damage than in the past,” according to the WSJ.
Any increase to pay will demand a strong case and proof from board directors at this time. Even without a raise, executive compensation attracts greater scrutiny from shareholders, employees and the public in times of economic disruption.
For public companies, the threat of activist investors looms large. A senior vice president with a proxy advisory firm told WSJ that payouts to executives for leading through a crisis could invite shareholder activism and “lawsuits for years.”
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