CEO AND BOARD REMUNERATION TO COME UNDER THE SPOTLIGHT

24 Mar CEO AND BOARD REMUNERATION TO COME UNDER THE SPOTLIGHT

It’s the second week of our COVID-19 insights summary and we hope you are finding it useful.

International news

• Companies are shoring up their cash reserves and axing dividends
  • Delta Air Lines has become the sixth S&P 500 company to cut its dividend, saving USD 1bn annually in the process. Howard Silverblatt, senior index analyst for S&P Dow Jones Indices, said the cuts announced by US companies have reduced the total dividends expected from members of the S&P 500 this year by almost USD 10bn, or 1.9 per cent.
  • The same pattern is being seen across the Atlantic, where more than £1.5bn has been wiped off the expected payouts of British companies alone — and £500m just on Monday after companies including ITV, IWG, Fuller’s and Kingfisher all pulled their final dividends. Read the full Financial Times article here. (Subscriber access)

• Onslaught of emails from companies causing anxiety, experts say
  • According to the WSJ, “Businesses, large and small, have been sending emails to reassure customers during the coronavirus pandemic, promising clean counters in kitchens and hand sanitizer in stores. But experts say that while companies are trying to inform and reassure their customers, there is a fine line between keeping them in the know and adding to the noise.” The paper quotes singer Kacey Musgraves as having complained on Twitter: “Corona has really made me realise… how many corporate emails I need to unsubscribe from.” (Subscriber access)

Australian company news 

• As traditional sources of capital dry up, governments may need to step in directly to support critical businesses
  • The Federal Government’s $66 billion stimulus package will not be enough to prevent the loss of a large numbers of jobs, demonstrated by the flood of announcements that hit the ASX on Monday.

• • The AFR column, Chanticleer, suggests that as unpalatable as it is for capitalist investors and conservative governments, some sort of direct government loans, equity injections or meaningful wage subsidies for strategically important employers may need to be considered next. (Subscriber access)

• At least 40 companies made coronavirus-related announcements to the ASX on Monday – double the number of profit revisions issued in the past two weeks
  • Analysts at Macquarie Wealth Management noted that the companies that reduced their earnings forecast fared better than those that withdrew their earnings entirely. Those who cut guidance experienced an average fall of 4 per cent, while those who withdrew guidance suffered an average 10 per cent sell-off. Read the article in The Australian article here. (Subscriber access)

• Chief executives and board remuneration to come under the spotlight
  • Chief executives and boards are taking immediate action to cut costs – and to curtail executive remuneration:
    • Optus CEO desginate Kelly Bayer Rosmarin is donating one month’s salary to “support those affected by Coronavirus and those researching vaccines and other medical approaches.” View the announcement here.
    • The AFL’s executive team will take an across the board pay cut of approximately 20 per cent in response to the virus – read The Age article here. (Subscriber access)
    • Flight Centre’s senior leadership team will give up to 50 per cent of their salaries to cut costs – view the ASX announcement.
    • Timing of regulatory filings of AMP and Goldman Sachs chief executive pay for 2019 have resulted in backlash. (Subscriber access)

• Industry events move online
  • The Financial Review will host a special one-day virtual Banking & Wealth Summit Crisis briefing on Monday, 30 March ,to focus on the industry’s response to the coronavirus pandemic. The sixth annual Financial Review Banking & Wealth Summit has been postponed. (See below)

Australian markets 

• Short selling in focus with rise in number of unsettled trades
  • The Australian Securities and Investments Commission is on the lookout for illegal “naked” short selling by stock traders, however authorities have no plans to stop more conventional “covered” short selling, which is permitted. Read more about naked v covered short selling in The AFR article here. (Subscriber access)

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Our daily briefing is not meant to be a summary of media coverage but rather, insights that may be helpful in understanding how organisations are communicating with stakeholders in a time of crisis – and what comes next. Sign up via email.