Corporate Governance in an Era of Remote Work

Posted: October 27, 2020

In the wake of the COVID-19 pandemic, organizations have swiftly transitioned to remote work. Employees of Facebook and Salesforce have been given the opportunity to work from home until at least the summer of 2021. A number of companies, including Square, Twitter, and Coinbase, will allow employees the option of remote work indefinitely. Companies that elect to transition to remote work in a sustained capacity may reap significant fiscal benefits from such structural changes. Kate Lister, President of Global Workplace Analytics, estimates that typical employers could potentially save about $11,000 annually for every employee working remotely 50% of the year. As work-from-home becomes widely adopted, the implications for corporate governance will manifest in myriad ways. In the face of rapidly unfolding broad-sweeping economic changes, compensation committees will be tasked with addressing new variables that will directly impact compensation policies. As a result of the global shutdowns, many organizations have experienced sharp and dramatic declines in revenue, forcing layoffs and other structural changes, while some companies—such as Amazon—have seen increases in shareholder value. In light of the diversity of outcomes resulting from the pandemic’s economic impact, each organization will tread a unique path forward in terms of implementing changes in the domain of corporate governance. Given the demand for remote work, compensation committees will consider remote or hybrid work as a means to attract talent and as part and parcel of compensation packages. As companies reduce overhead costs associated with maintaining physical office spaces, committees will also consider how funds should be reallocated. Faced with new demands and sometimes competing pressures from various stakeholders, committees will invariably be required to address compensation from the executive level to the employee level. Workers classified as “essential” assume greater risks than employees who are working from home. Committees will need to address whether employees whose roles cannot be carried out remotely should be paid more. Furthermore, incentive-based payment plans may come under scrutiny in a time of economic crisis. Should executives receive bonuses in a year in which shareholders have lost value, those shareholders may express discontent with the organization. The pandemic has underscored the fallacy of the notion that companies exist to maximize returns to shareholders. Society at large relies on companies to meet the population’s basic needs. As such, boards must be concerned about “a full range of factors that enable the company to create value over time, [which] paradoxically, […] does not diminish boards’ accountability to shareholders, but [implies] changes in the nature and scope of that accountability.” The current public health crisis has highlighted the role of the Board in addressing crisis management at an organizational level: the Board plays a discrete role in supporting executives and managers in assuring the safety of employees and stakeholders. Boards will also be responsible for investing in training and education to augment the transition to remote work. To learn more about maximizing executive salary, visit our Contact Page, or contact us directly by email at or by phone at 415-618-6060.