SEC Comp Disclosures Get CFO Support

March 23, 2006 ( - The recent move by the US Securities and Exchange Commission (SEC) to require broad-brush executive compensation disclosures has drawn wide support in a recent chief financial officer survey.

A news release said that the quarterly CFO Outlook Survey conducted by Financial Executives International (FEI) and Baruch College’s Zicklin School of Business found that 71% were generally behind the disclosures. While 4% thought the disclosures (See  SEC Unveils Proposed Exec. Comp. Disclosures Mandate ) will actually drive pay up, about one-third said the information release will make companies more careful not to award excessive pay.

According to the announcement, 64% said they opposed US House Bill (HR 4291) that would require shareholder approval of executive pay packages, one in three said they backed the bill outright or with conditions. Approval for this proposal was higher among private companies than public companies.

Colleen Cunningham, president and CEO of FEI, noted the questions on executive pay drew some of the strongest comments in recent survey history. “In general respondents acknowledged the problem of excessive compensation but felt responsibility for its control lay with the Board and its compensation committee rather than via additional regulation,” Cunningham said in the news release.

CFOs’ answers to questions on employee benefits reflected an acknowledgement of relentless cost pressure in this area. Of the companies currently offering a defined benefit pension plan, 37% said they were thinking about freezing it or converting it to a defined contribution or cash balance plan. More than half expressed serious concern about the increasing amount they will have to pay in pension insurance premiums to the Pension Benefit Guaranty Corporation as part of the ongoing pension reform changes.

Not only that, but 95% of companies expect their health care spending to increase, with the average increase forecast at 8%. Companies in the survey group are currently covering just over 70% of employee health care premiums, on average, with one-third having trimmed their subsidy during the past three years.

Finally, more than three-quarters (77%) of the 200 CFOs surveyed expect their companies to hire more people over the next twelve months, at an average increase of 4%. 

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