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COVID-19 and the Board: How Boards Are Responding

May 2020

Companies around the globe have been affected in unprecedented ways by the novel coronavirus. Their boards of directors play a critical role in helping navigate this crisis.

Spencer Stuart virtually convened several groups of directors of public companies recently to discuss how their boards are exercising their oversight responsibilities and meeting the challenges of this extraordinary time. Over the course of the month of April, a half dozen meetings were held with more than 100 directors representing over 120 large and highly regarded U.S. public companies.

The discussions, which were conducted on a non-attribution basis, covered many governance topics that boards are dealing with today, but they coalesced around three main themes:

  • Communication between the board and management during this crisis
  • Changes in executive and board compensation
  • Emergency succession planning for both management and the board

Communication between the board and management

Most boards have increased the cadence of communication among directors and between the board and CEO since the crisis began. Directors are trying to strike a delicate balance allowing them to get sufficient information to perform their oversight duties without overburdening or distracting the management team.

At many companies, board leadership is helping to manage the communication flow between boards and management. Chairs and lead independent directors, who serve as a liaison between the board and management in normal circumstances, have accelerated their engagement and communication with management and the rest of the board. In this go-between role, these leaders absorb some of the stress on management by helping to manage the frequent requests for information from directors. One board has formed an executive committee to spend more time with management evaluating the circumstances of the business to be nimbler and speed decision-making.

Other communications considerations for boards include:

  • Security. Board communications should always be done securely, with minutes taken during all meetings and uploaded to the board portal. Extra caution should be taken to prevent cyber-attacks or exposing the company in any way when communicating through digital channels. In some cases, phone calls with the corporate secretary may be preferable to written communication. Emails should be kept brief and reviewed before sending.
  • Cadence. Management is providing more frequent updates, which tend to be less formal and prepared than typical. More frequent updates from the CEO and management team on COVID-related topics complement more general performance reports circulated on a monthly basis. Boards also report meeting more often, especially early on in the crisis. One board in a hard-hit sector has had standing Monday and Thursday board meetings focused on increasing liquidity and raising capital.
  • Format. Boards are experimenting with formats and platforms to increase transparency. Some have created a check list or internal dashboard for board updates that touch on key areas such as employee well-being, technology, capital/liquidity, investments, regulatory issues, risk, legal and other COVID-19-related topics. At one company, management uploads an updated internal dashboard to the board portal each Friday, enabling it to keep the board updated without additional work by the management team.

Looking ahead. For now, boards are focused on the short term, as the crisis timeline and longer-term impact remain hard to predict. Disclosures and forward-looking discussions are likely to change as the impact of the crisis becomes clearer.

Executive and board compensation

Companies in industries that have been hit hardest, including the airline, retail, hotel, real estate, energy and transportation sectors, generally have been first to reduce executive and board compensation in response to the crisis. Approximately 10 percent of the Russell 30001 have taken action to reduce executive and/or board compensation. In many cases, the CEO and executive team are “leading the way” by proposing compensation adjustments, with the board following suit in a show of shared sacrifice. Director compensation reductions tend to apply only to cash retainers. Pay reductions are generally short-term and reviewed monthly or bi-monthly.

Other compensation considerations for boards include:

  • Rationale. The rationale for decreasing board and/or executive pay tends to fall into three categories: to demonstrate alignment with shareholders; to reduce expenses amid cash flow/liquidity needs; and to show shared sacrifice with employees, especially at companies that have laid off or furloughed workers.
  • Documentation. Boards should make sure they are documenting compensation decisions carefully so they have the analysis and can demonstrate that they carefully thought through the issues in case decisions come under scrutiny later.
  • Compensation metrics. Performance metrics are a challenge for compensation committees. In many cases, metrics are no longer relevant at companies with calendar year-ends. Committees with a later fiscal year have the opposite dilemma: trying to set targets during a time of significant uncertainty while also addressing dilution and windfall concerns due to potentially artificially low stock prices.

Looking ahead. Changes to compensation will likely have trickle-down effects over time. The board should stay attuned to these and manage as necessary with an eye to setting awards to preserve equity while still retaining and motivating the executive team.

Contingency planning/emergency succession

Most directors indicated that their boards have an emergency CEO succession plan in place, and many said emergency successors for other key executive roles have been identified. The current crisis underscores the importance of having a robust, formal emergency succession plan that potentially includes planning for multiple backup successors.

Other considerations for boards include:

  • Contingency planning for the board. Some boards are considering backup plans for key board roles, including chair, lead director and audit committee chair. Boards and nominating/governance committees need to be thoughtful about identifying potential successors for roles requiring specific skills such as the audit committee chair, understanding the constraints and repercussions of specific moves. When creating emergency succession plans for the CEO and chair, boards should ask potential successors about potential conflicts and consider the bandwidth of potential interims.
  • Disclosure. No disclosure obligations are triggered if the CEO or board chair is diagnosed with COVID-19. However, it’s a disclosable event if the illness results in a change in title or requires another executive or board member to take up the duties of the CEO or chair.

Looking ahead. Some boards have observed mid-level talent “rising to the occasion” during the crisis. While this does not impact emergency succession planning, the contributions of these individuals and the increased visibility will have implications for longer-term succession and executive development.


As the COVID-19 crisis abates, boards and management teams will have opportunities to reflect on how well their organizations responded and what changes to board governance may be needed to better respond in the future. Boards will consider questions such as: What has gone well? What have we learned? How should we think about corporate strategy going forward? Do we need to make changes to our structure, including adding committees or evolving their remit? Do we need to rethink our approach to risk management or security?

Finally, boards will likely continue to carefully examine their composition and the value of having a real balance of perspectives on the board. The crisis has revealed the benefits of having a strong mix of current skills — for example, deep technology expertise and finance experience — and the perspectives from directors serving on multiple boards, who can bring valuable ideas and observations from other organizations.

1FW Cook: