Compensation and benefits impacts of COVID-19

Updated: As part of the overall analysis of the financial reporting impacts of COVID-19, companies may need to evaluate the impacts on compensation and other benefit arrangements.

Applicability

• All companies

Relevant dates

• Effective immediately

Key impacts

As a result of the impacts of COVID-19, companies are taking actions that have an impact on financial reporting, such as providing revised or new compensation arrangements, evaluating existing compensation arrangements to determine if any specific terms, conditions or estimates have been affected, and/or making modifications to compensation and benefit arrangements. 

In addition, companies may enter into workforce actions that could result in pension or postretirement curtailments or settlements, or the need to pay severance and other postretirement benefits.

Questions that companies may be asking include:

• Has market volatility affected the likelihood of achieving market conditions in stock-based awards? 
• Do we need to reassess the probability of stock-based awards with performance conditions?
• Are we considering modifying share-based payment awards to change certain terms and conditions, such as vesting criteria or strike prices?
• For new or modified awards, are we considering including some discretionary performance conditions due to the significant uncertainty in our future performance?
• Have we implemented a restructuring plan that includes termination benefits?
• Have employee terminations or other actions created a significant event requiring an interim remeasurement of our pension or postretirement plan assets and obligations? 
• Has the company implemented new or revised sick leave or paid time off policies to respond to employee needs?

Report contents

• Share-based payments
• Termination benefits
• Retirement benefits: Interim remeasurements
• Sick pay and other paid time off
• Furlough arrangements (new)
• Subsequent events