On 19 March, UK proxy adviser Pensions & Investment Research Consultants (PIRC) sent a letter to UK company secretaries highlighting how COVID-19 is impacting on the general workforce, especially workers without leave and sick pay.

PIRC is Europe’s largest independent corporate governance and shareholder advisory consultancy, acting in proxy advisory capacity by analysing companies to inform investor voting.

PIRC was of the view that companies must consider executive pay through the lens of the challenges employees are currently facing.

“Few if any executive pay schemes are likely to be appropriate for a company in current market circumstances and the health emergency,” the letter says.

PIRC is calling on companies to suspend all payments to executives other than basic salary from 1 April until the end of the financial year. In the UK, this is generally until the end of the calendar year.

“If it is deemed appropriate to cut dividends and reduce the workforce due to these events, which in many cases is already happening, then it is difficult to understand how executive bonuses and LTIP awards – essentially based on last financial year – can be justified.”

In effect, this means suspending the payment of all variable pay until further notice, if companies are to follow PIRC’s wishes.

PIRC’s perspective is interesting, assuming companies are all in the same boat, and should respond the same way. Based on Guerdon Associates’ experience to date, this is not the case, and responses will vary. At this stage we believe that local proxy advisers would have a more nuanced approach, notwithstanding that they will need to consider and form views on a significant range of remuneration governance issues as listed companies respond to COVID-19.

See the PIRC letter HERE .

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