Human Resources: CEOs SEE STRONG BONUSES, EQUITY GAINS,WATSON WYATT ANALYSIS FINDS

Washington, April 5, 2007 – Chief executive officers at the nation’s largest companies saw their annual bonuses increase 13 percent and the value of their equity-based compensation holdings grow nearly 50 percent last year, according to an analysis of proxy statements conducted by Watson Wyatt Worldwide, a leading global consulting firm.

“Corporate America enjoyed a banner financial year in 2006,” said Steve Van Putten, a senior executive compensation consultant at Watson Wyatt. “CEO pay moved in step with corporate earnings and stock prices, reflecting the trend toward performance-based compensation.”

According to the analysis, median annual bonuses for CEOs increased 13 percent to $2.2 million last year. At these same companies, the median growth in earnings per share was 14 percent. Earnings per share is a commonly employed performance metric in annual incentive programs. Base salaries also grew by a more modest 4 percent to a median $1.1 million. The proxy analysis is based on 92 large companies whose CEOs remained in their positions in 2005 and 2006.

The analysis also found that the median value of CEOs’ equity compensation, which includes in-the-money stock options and restricted stock awards, increased 48 percent last year to $30.2 million. This was fueled in part by the 18 percent increase in total returns to shareholders (TRS) last year. For CEOs at high-performing companies (those with a median 30 percent TRS), equity compensation nearly doubled last year to $31.3 million, while CEOs at low-performing companies (7 percent TRS) saw their equity compensation increase by 13 percent to $25.3 million.

“The correlation between realizable pay – the value of outstanding long-term incentives granted to executives over a specific time frame – and company performance remains as strong as ever,” said Ira Kay, global director of compensation consulting at Watson Wyatt. “It is also a good reminder that, because stock options are highly leveraged, even a small increase in stock price appreciation can lead to an increase in value for other CEOs.”

Kay and Van Putten’s book, Myths and Realities of Executive Pay, is being published by Cambridge University Press and will be available this summer.

About Watson Wyatt Worldwide
Watson Wyatt (NYSE: WW) is the trusted business partner to the world’s leading organizations on people and financial issues. The firm’s global services include: managing the cost and effectiveness of employee benefit programs; developing attraction, retention and reward strategies; advising pension plan sponsors and other institutions on optimal investment strategies; providing strategic and financial advice to insurance and financial services companies; and delivering related technology, outsourcing and data services. Watson Wyatt has 6,000 associates in 30 countries and is located on the Web at www.watsonwyatt.com.

Media Contact:
Ed Emerman
609-452-5967
eemerman[at]eaglepr.com

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