Shareholder Friendly: Executive Pay Guidelines are Changing

August 20, 2008 ( - Responding to criticism of executive pay packages, a growing number of U.S. companies are making their executive pay programs, as well as portions of their executive benefit plans and severance policies, more shareholder friendly, Watson Wyatt found.

According to an analysis of 2008 company proxy statements of 75 large, publicly-traded companies, 87% now have stock ownership guidelines and requirements for executives, an increase from 75% in 2007, Watson Wyatt said in a press release. In addition, the analysis found 38% have a claw-back policy that enables companies to recoup incentive compensation if the financial measures underlying the incentive plans are restated – an increase from 23% who had such a policy in 2007.

Many companies are also making or considering changes to their “non-core” compensation programs. Roughly one in four companies analyzed (24%) have made or are considering changes to their severance policies, while 43% have amended or are considering amending their change-in-control policies. Approximately one in 10 companies (11%) changed their Supplemental Executive Retirement Plan in 2007.

Watson Wyatt also said companies have begun to moderate their targeted executive pay levels and bring them more in line with those of their peers. In 2008, the vast majority of companies set their targeted total pay and individual pay elements at or near the 50th percentile, according to the press release.

For more information, read the Watson Wyatt Insider article on 2008 compensation discussion and analysis findings, available here .