At the onset of the Covid-19 pandemic in the U.S., corporate dealmakers largely put away their checkbooks in favor of preventing and putting out fires within their current portfolios. There went one of the primary devices in activist investors’ tool kits.

But rather than take a break from campaigns, activists have rummaged around for other tools. Instead of focusing on deals, recent campaigns have taken on executive pay and the poison pills that many companies enacted at the start of the market’s crash in March.

Looking back on these situations in a July 9 webcast hosted by The Deal and Willkie Farr & Gallagher LLP, activists and advisers appear largely to agree that in most situations where companies furloughed employees or cut their pay, CEO pay should have been cut as well. And on the subject of poison pills, oft-termed shareholder rights plans by companies, whether these institutions were in the right to enact them or not depends on the situation, but most of the panelists agreed that their use during Covid will have consequences.

“If you’re asking your employees to accept a furlough, if you’re cutting pay, if you’re cutting benefits, it’s a bad look for a CEO or the board to not share the pain with everybody else,” Willkie Farr & Gallagher LLP partner Martin L. Seidel said during the web event entitled “Pills and CEOs Under Fire as M&A Fades.” “It’s not really a legal issue so much as it is basic common sense. If you’re out there taking extra pay for yourself, you’re painting a target on your forehead.”

That target may attract activist investors and influence them and other shareholders to influence change at the company through so-called say-on-pay votes, The Deal’s Ron Orol, who moderated the panel, pointed out.

According to consulting firm Semler Brossy, 45 U.S. companies have faced worse than 50% votes on executive pay packages as of July 2, in 2020. In addition, the firm found that one or more directors at 815 companies over the same time frame received a negative vote of 20% or worse in 2020–of those, 41 directors at 31 companies faced 50% or higher negative votes.

“Simply saying ‘It’s business as usual’ while 25% of my workforce is sitting at home collecting government checks is just not a good look for any CEO or their board members,” Seidel added.

Activist Ben Rosenzweig of Privet Fund Management LLC, who won three board seats on June 30 in a proxy fight with steel and chemicals maker Synalloy Corp. (SYNL), agrees that many companies during the pandemic should have considered moves such as these and that management teams should have had the freedom to fully exercise these options as they saw fit.

But he noted that companies facing pressure during the pandemic were in all likelihood disappointing investors prior to the pandemic, and the crisis may have only exacerbated the issue. These management teams, he added, need to do more than merely adjust executive pay because it’s a bad look.

“Doing things for optical purposes … you have to be very careful there,” Rosenzweig said. “The need for leadership is even more pronounced during difficult and potentially uncertain times, and when you look at the past decade, which has really seen fairly unprecedented economic growth that’s been wide-ranging and broad in base, I think investors are justified to be worried if a leadership team that has not been able to generate performance and value creation over that time period is then messing around with some of the mechanics of their own compensation during this pandemic period, as opposed to being very aggressive in taking definitive action to position their company to survive and potentially thrive on the other side.”

Yet many companies have simply sought to buy time by adopting poison pills. These mechanisms have traditionally been viewed as a method for preventing activist incursions and hostile takeovers. But during the pandemic, a somewhat tossed-aside, two-tiered version of the pills, which block active investors at 10% stakes and passive investors at 20%, started to pop up.

Poison pills were created and widely used in the 1980s, but have been few and far between in recent years until March, according to Ken Bertsch, executive director of the Council of Institutional Investors. Bertsch said on the panel that about 58 pills were adopted between March and early July, and a direct correlation to the market’s behavior in reaction to the Covid-19 pandemic has been observed, with pills being adopted less frequently in June and July as markets improved. About half of the pills adopted in 2020 have had the two-tier structure that cap active and passive investors at different points, he added.

Panelists took a mixed view of their legitimacy.

“Look we think these things are absolutely discriminatory,” Legion Partners Asset Management LLC co-founder and managing director Christopher Kiper said during the event. “Somebody needs to go to court and challenge these things, for sure. The notion that passive investors are different than people who actively express their point of view is ridiculous. Why would you want to put some corporate mechanism in place that stops people who would otherwise want to buy your stock?”

Bertsch said there is less concern about the issue among the broader investor base, especially among really large shareholders, who “like not having the hassle of thinking about whether they might be triggering a poison pill.”

Nevertheless, Kiper, whose firm was among three activists to settle with Bed Bath & Beyond Inc. (BBBY) in a heated 2019 battle, said the move may well keep shareholders from buying stock even while failing to prevent successful activism campaigns.

“I can’t remember very many times ever where I felt like a pill got in our way of getting the most that we wanted for an election,” he opined. “And if anything, it just incensed the shareholder base to see that there was a pill there when management hadn’t been performing well. So I think if anything it just excites the shareholder base and helps us in a campaign versus hurts us.”

Editor’s note: The original version of this article was published earlier on The Deal’s premium subscription website. For access, log in to TheDeal.com or use the form below to request a free trial.