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COVID-19’s Incentive Impact: While Most Companies Wait, Companies with Early FYEs are Forced to Act

We are increasingly participating in board-level discussions focused on how to ensure that management teams stay focused, engaged and properly incentivized.

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When the COVID-19 pandemic started to spread across the United States, boards of directors initially focused on ensuring the safety of their employees and customers and managing to stabilize their businesses for uncertain times ahead. Early on, many companies were…

How and Why Pre-Commercial Biotech CEO Pay is Different

Part One: Tailoring Pay to the Business

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The Say-on-Pay (“SOP”) era has fostered remarkable homogenization in executive compensation program design. The two primary contributing factors are: 1. Expanded compensation disclosure requirements for publicly traded companies, increasing the transparency of competitors’ programs. 2. The heightened influence of proxy…

Embrace the Use of Discretion in This New Era

Reprinted Director Advisory article in the July/August issue of NACD Directorship.

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So far in 2020, market volatility, economic uncertainty, severe business disruptions, and concerns over employee health have materially changed how leaders approach business planning. These breaks from the norm have and will continue to have an impact on compensation committees’ …

Banking Industry Response to COVID-19

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Introduction The 2020 Coronavirus (COVID-19) pandemic represents one of the most significant global events in recent history, resulting in unprecedented impact on our country’s economy, its businesses and its people. For our financial services clients, initial priorities focused on the…

Predicting the Future of E&P Bonus Design

The current oil and gas market challenges are testing the efficacy of prevailing bonus plan structures among exploration and production (E&P) companies.

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E&P bonus plans have historically aligned with growth and investment, focusing on volume (production and reserves) and cost reduction, measures that are more controllable by management and less impacted by commodity prices than earnings-based metrics. In recent years, investors and…

Survey Results: Oil & Gas Workforce and Compensation Strategies

Meridian surveyed fifty-eight companies in the E&P (n=40) and Oilfield Service (n=18) sectors in April to gauge the ongoing impact of COVID-19 and low oil price/demand on companies’ workforce and 2020 compensation programs.

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Key Takeaways In our March survey results we reported an overwhelming majority of companies focused on emergency business actions and less on compensation considerations. As of the end of April, it appears companies have taken action on their now identified…

Executive Salary Reductions in Oil & Gas: What’s the Message?

Through 4/30 we have tracked nearly 60 energy industry companies that have announced CEO salary cuts, the most of any industry group in our COVID-19 database.

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The fact that so many energy industry companies have reported salary reductions should not be surprising; the double black swans of record production and cratering demand have driven industry stock prices further down on average (-58%) than in any other…

Announced Retail Executive and Outside Director Pay Reductions

Since the onset of the COVID-19 pandemic in the U.S., Meridian continues to monitor the unprecedented actions taken by retailers.

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Since the onset of the COVID-19 pandemic in the U.S., Meridian has monitored the unprecedented actions taken by retailers to enhance financial flexibility and offset the substantial impact to operations associated with prolonged store closures. These actions have included eliminating…

How should oil & gas companies approach their 2020 annual bonus?

“Wait and see” seems to be the mantra of the day, particularly when it comes to an energy company’s annual bonus plan.

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“Wait and see” seems to be the mantra of the day, particularly when it comes to an energy company’s annual bonus plan. We think that’s a prudent approach for the moment, as much uncertainty remains among the energy industry and…

The $2 Trillion CARES Act Imposes Limits On Employee Pay

As seen in Corporate Board Member - The largest stimulus bill in U.S. history conditions the granting of federal loans and loan guarantees on companies’ agreement to limit employee compensation.

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On March 27, 2020, President Donald Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (‘‘CARES Act”) which passed both the U.S. Senate and the House of Representatives earlier last week with bipartisan support. The CARES Act…

The Impact of Recent Pay Actions on Severance Arrangements

Our recent posts have summarized a range of compensation actions across the oil and gas industry that companies have either announced or are considering in response to the current market environment.

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These actions have included pay reductions, work furloughs, and layoffs. Among other matters, companies likely need to evaluate the impact of these actions on severance benefits. Multiple types of arrangements provide for cash and other benefits in the event of…

Should We Cut Outside Director Compensation?

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In our last two postings, we highlighted a number of potential compensation implications for oil & gas companies in the current environment. Beginning with this update, we’ll select some key topics to review in a bit more depth. And, since…

Retail on the Ropes, But Punching Back

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With phrases like “shelter-in-place,” “social distancing” and “flattening the curve” becoming common vernacular, the U.S. and its economy have entered uncharted waters in response to the COVID-19 pandemic. While many industries are feeling the effects of this evolving crisis, retailers…

Oil & Gas Crisis Response: 2020 Compensation Responses will lead to Sustained Changes

2020’s significant downturn already shows some marked differences from the 2008-2009 and 2015-2016 downturns (the last instances where oil prices fell more than 50% over a short time period).

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Mere weeks after boards approved compensation outcomes from 2019 performance, there’s a temptation to revisit or change those outcomes under the lens of 2020 performance. We believe that in the large majority of cases, those 2019 outcomes should stand on…

Revisiting Board Pay in a Time of Crisis

Many companies are re-examining their non-employee director compensation programs in light of COVID-19-related disruptions.

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There is a clear appetite to set the right tone at the top as business leaders balance (a) keeping their workforce and customers safe and healthy with (b) navigating supply chain uncertainty and weakened demand for their products and services.…

Compensation Implications of the Current Environment

The week of March 9, 2020 may have marked the single worst week for oil and gas stocks on record.

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That was rough… The week of March 9, 2020 may have marked the single worst week for oil and gas stocks on record. A lot has changed, and the only thing certain is that more change will come. Here is…