Summary
Mastercard Inc. filed an 8-K on January 4, 2021, detailing adjustments made by its Human Resources and Compensation Committee (HRCC) to executive incentive compensation for 2020 and a portion of performance stock units (PSUs) vesting in 2021. These adjustments were made in response to the significant impact of the COVID-19 pandemic on the Company's financial performance and operating environment. The HRCC modified performance targets for both the 2020 Annual Incentive Awards and the 2018 PSU Awards to better reflect performance within management's control, excluding impacts from decreases in Personal Consumption Expenditure (PCE) and cross-border travel, as well as certain pandemic-related expense savings. Crucially, the maximum payout for both award types was capped at the target amount, ensuring a compensation outcome for 2020 that is lower than the preceding three years and aligning executive rewards with stockholder interests during an unprecedented period.
Key Highlights
- 1Mastercard's HRCC adjusted 2020 annual incentive awards and 2018 PSU awards due to the COVID-19 pandemic's impact.
- 2Performance targets were modified to exclude uncontrollable factors like decreased Personal Consumption Expenditure (PCE) and cross-border travel.
- 3Certain pandemic-related expense savings were also excluded from performance calculations.
- 4Maximum payouts for both 2020 Annual Incentive Awards and 2018 PSU Awards were capped at the target payout amount.
- 5The adjustments are intended to ensure compensation accurately reflects performance within management's control and retains key talent.
- 6The resulting compensation outcome for 2020 is expected to be lower than in the three years prior to the pandemic.
- 7The Company's one-year TSR was 20% (68th percentile of S&P 500) and three-year TSR was 140% (94th percentile of S&P 500) as of December 31, 2020.