Few Companies Planning Executive Comp Changes

March 14, 2006 (PLANSPONSOR.com) - In spite of the Securities and Exchange Commission's (SEC) recent proposal requiring better disclosure of executive pay programs, most US companies are not planning any changes to theirs, according to a recent survey.

The survey from Watson Wyatt Worldwide found that only 9% of employers said they are planning changes to their executive pay programs, a news release said.   Seventy percent said they do not plan to make changes, while 21% were unsure.

Additionally, though a large majority (82%) of survey respondents think that their current compensation committee disclosures do not fully provide the information that the proposed SEC rules call for, 48% do not intend to change their proxy disclosures this year, while 23% said they will.   “We believe many companies are taking a wait-and-see approach to the proposed rules,” said Ira Kay, global director of compensation consulting at Watson Wyatt, in the release.  “While some companies recognize their disclosures are inadequate, most want to see what the final rules entail and how other companies respond.”

Other findings of the survey include:

  • Six out of 10 respondents (61%) think the rules will not improve corporate governance, double
    the number who said the rules will improve governance.
  • Seventy-one percent believe the value their employees realized from stock option exercises is less than their accounting costs, while 14% believe it is more than their accounting costs.  The remaining 15% think it is about the same or didn’t know.

In January the SEC proposed improved executive comp disclosure requirements covering proxy statements, annual reports, registration statements and the commission’s Form 8-K (See  SEC Unveils Proposed Exec. Comp. Disclosures Mandate).

Watson Wyatt polled 112 compensation and human resource executives at large publicly traded companies in February.