Many Companies Won't Disclose Exec Comp Performance Goals

January 24, 2008 ( - Many large U.S. companies do not plan to disclose performance goals for their executive pay programs in their 2008 proxy statement, despite Securities and Exchange Commission (SEC) urgings to do so, according to a poll by Watson Wyatt Worldwide.

In a press release, Watson Wyatt said it found only 42% of companies plan to disclose on their 2008 proxy the specific goals used in their executive compensation plans for the 2007 fiscal year, while 31% of companies have no plans to reveal the goals. The remaining 27% said they are unsure of their plans.

However, the survey found most companies (89%) said they will alter the compensation discussion and analysis section of their proxy, the release said.

In new disclosure rules from the SEC that went into effect in December of 2006 (See New Executive Compensation Disclosure Rules Take Effect ), the agency requested companies disclose their performance goals, unless providing them would result in competitive harm.

Most companies (68%) responding to Watson Wyatt’s survey said they do not plan to change their approach to goal setting, but a small number (21%) said they intend to modify their compensation programs in response to the SEC rules – an increase from just 5% who said so in a similar 2006 poll. Sixty-three percent of companies indicated they have no plans to make program changes, and the remaining 17% are unsure.

“While the rules may not have a large impact on overall corporate performance, they are causing companies to rethink and, in some cases, adjust their executive compensation programs,” said Ira Kay, global director of executive compensation consulting at Watson Wyatt, in the press release.

Most respondents (77%) said the disclosure rules will not have much effect on corporate performance, however, the number of companies that think the rules will improve performance nearly doubled from the prior year’s survey, from 11% to 21%.

The findings are based on a Watson Wyatt poll of legal, compensation, and HR executives at 135 large, publicly-traded companies.