Many U.S. employers stay quiet on pay goals

Watson Wyatt poll finds limited disclosure
By Sarah Dobson
||Last Updated: 04/07/2008

Only 42 per cent of large companies in the United States plan to disclose performance goals for executive pay programs in a 2008 proxy statement, according to a poll of legal, compensation and HR executives at 135 large, publicly traded companies by consulting firm Watson Wyatt Worldwide.

As of the 2007 proxy season, the Securities and Exchange Commission (SEC) adopted new disclosure rules in an effort to provide investors with a clear picture of how executives are compensated. However, 31 per cent say they have no plans to reveal the goals while the remaining 27 per cent are unsure.

“The SEC has put significant pressure on companies to disclose their goals so that shareholders can determine if programs are paying for performance. However, companies are still struggling with the decision of whether to disclose this information.” said Ira Kay, global director of executive compensation consulting at Watson Wyatt.

The poll also found most companies (68 per cent) do not plan to change their approach to goal setting. However, a small but growing number of companies (21 per cent) intend to modify their compensation programs in response to the SEC rules, a big increase from just five per cent in a 2006 poll. Sixty-three per cent of companies have no plans to make changes. The remaining 17 per cent 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 Kay.

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