L-Blast | August 2020
Dear All,
It’s hard to believe we are six months into this pandemic. Summer break is over and kids are starting a new school year under unprecedented conditions. We hope they all have a blessed and safe year. Here at NFPCC, we are preparing for the busy fall season as we gear up to help our clients navigate the challenges this year has brought.
In this month’s L-Blast we would like to share a case study for one of our recent clients involved in a restructuring. This case was focused around the reasonableness of the compensation package payable to the executive team. NFPCC served as the compensation expert and conducted a detailed analysis that resulted in significant savings for the client and a performance-based compensation strategy that benefitted all parties.
The next article is particularly important during this time, as companies start to plan for next year’s compensation strategies. This piece offers ways to manage pay decisions amid the current uncertainty that will help companies thrive in a post-pandemic marketplace.
Lastly, in the final article, we take a look at shareholder activism during this year’s proxy season. Although 2020’s proxy season has been unlike any other, interestingly, activism did not see a decline. Market volatility gave way for many activists, both in distressed sectors and in high-performing businesses that saw temporary value disruption. And in 2021, we may see a surge in activism, much like we did after the 2008 financial crisis.
We hope you all continue to stay safe and remain optimistic. Don’t hesitate to reach out to us if you have concerns about your compensation programs, or if a restructuring is imminent in your organization, we are here to help.
Sincerely,
The NFPCC Team
Restructuring Compensation – Reasonable Compensation Case Study
Recently, NFP Compensation Consulting was engaged by a Fortune 500 telecommunications company for a project based on the compensation payable to the executive team through a restructuring. The noteholders believed the compensation recommended by the debtor advisors to be unreasonable relative to performance expectations outlined in the restructuring business plan.
READ MOREDeveloping a Post-Pandemic Pay Strategy
Companies have an opportunity to reset ties between work and rewards
Making decisions about employee pay is among the biggest challenges facing organizations in the wake of the coronavirus shutdown. There is no road map. Any recovery in specific businesses, markets and industries is very much an ongoing process. With unemployment topping 13 percent according to the U.S. Bureau of Labor Statistics, and the rate considerably higher in some analysts’ view, keeping pay tied to the market is difficult at best.
A Look Back at Shareholder Activism During the 2020 Proxy Season
The past four months have brought unprecedented change to the capital markets and the world at large. As the global COVID-19 pandemic spread throughout the world, the economic disruption was significant, and a decade-long bull market was transformed almost overnight. The proxy season that has followed has been unlike almost any other, but also reassuringly familiar. Despite predictions to the contrary, activism in the United States remained persistent; many large activists were limited in their activity, but the occasional and first-time activists that picked up the slack found considerable success in achieving their objectives.
READ MOREBankruptcy and Restructuring Assistance
We know many organizations are facing financial turmoil and as a result, may need to restructure or file for bankruptcy. NFPCC is a leader in this space and is here to offer support and professional guidance through this process. In addition, we develop post-emergence plans and full compensation programs aimed at retaining and motivating the team to rebuild and generate significant shareholder value. Learn more about our restructuring capabilities, or contact us if you are ready to get started.
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