Spotlight on Responding to COVID-19

As the novel coronavirus pandemic continues to spread across the globe, boards are working closely with their management teams to understand the facts, evaluate risks and form meaningful responses. Their areas of focus are wide-ranging and consider the impacts of this crisis on employees, customers, operations, vendors, lenders and other stakeholders. Shareholders have heightened interest in how companies are handling significant challenges and risks being posed by COVID-19 and how executives are contingency-planning.
Boards can expect shareholder questions around the following:

• Plans to ensure the wellbeing of their professionals and customers

• Crisis management roles and responsibilities between the board and management team

• Risk assessment and response to disruptions in all phases of product procurement, development and delivery

• Financial management, liquidity and sustainability impacts

• Adequacy of financial reporting and disclosures to convey risk

• Increased cybersecurity and data privacy considerations as more individuals telework  

• ESG opportunities and responsibilities during the crisis

• Considerations to modify executive pay plans as short-term responsive measures 

• Ability to provide timely public financial information

• Industry-specific risk mitigation plans (e.g. contracts, supply chain, technology)

Shareholders will also be awaiting decisions on whether or not a company is abiding by social distancing and its impacts on annual meetings, whether virtual or in-person.

Boards—working alongside management, public relations, human resources and counsel—need to be thoughtful and proactive in issuing timely, robust and transparent communications with all of their stakeholders. This is particularly important as new developments arise and local, state, federal and international officials issue new guidance and mandates.

Securing the confidence of stakeholders, particularly during times of crisis, is paramount. 

U.S. capital markets are facing pressures from significant societal shifts and an increasing focus on ethical and environmental concerns. New generations of shareholders are emerging, bringing with them new and evolving expectations. Together, directors and management must address heightened demands for stronger principles, greater transparency and better corporate accountability.

Already well-versed in a company’s financial health, shareholders will gather for annual meetings eager to weigh in on the issues directly impacted by a company’s overall direction and vision. For today’s shareholder, companies’ abilities to exhibit a strong corporate culture and design business objectives and reward structures aligned with key environmental, social and governance (ESG) issues is as important as navigating regulatory changes and growth pursuits. In the upcoming proxy season, we anticipate that demonstrating leadership integrity and intent will be paramount for those charged with governance in earning the confidence of current and would-be investors.

BDO’s Center for Corporate Governance and Financial Reporting weighs in on a variety of topics that corporate management and boards of directors are encouraged to consider in connection with their 2020 annual shareholder meetings.