CEOs at Best Performing Companies Receive Long-Term Incentive Payouts Substantially Above Target

WASHINGTON, D.C., February 20, 2008 – Chief executive officers whose
companies financially outperformed their peers over a three-year period
received long-term incentive award payouts that were more than 50 percent
above their target, according to an analysis by Watson Wyatt Worldwide, a
leading global consulting firm.

Watson Wyatt’s analysis revealed that CEOs at high-performing companies —
those with total returns to shareholders (TRS) above the median from 2004
to 2006 – were rewarded with long-term incentive payouts that were 156
percent of their targets. Conversely, CEOs at low-performing companies —
those with a TRS below the median – received median payouts of just 71
percent of target. Overall, CEOs earned median payouts slightly above
target at 114 percent.

Long-Term Performance Plan Payouts

Three-year TRS Median payout as
percent of target
High performers 101% 156%
Low performers 33% 71%
All companies 62% 114%

The Watson Wyatt analysis was based on CEOs at 177 companies who remained
in their jobs for the three-year period and who received long-term
performance share or cash awards. The analysis did not include any stock
options or restricted stock awards that the CEOs may have also received.

“The fact that high-performing companies rewarded their CEOs with
above-target payouts shows a strong correlation between pay and
performance,” said Ira Kay, global director of compensation consulting at
Watson Wyatt. “We believe that for the most part, strong company
performance led to above target awards. While there may be a few cases of
companies setting goals that were too easy to achieve, it’s clear that
rewards play a crucial part in driving most CEOs to excel.”

The analysis also found that high-performing CEOs, as measured by one-year
earnings per share (EPS) growth, received median annual incentive payouts
that were 11 percent above target. However, CEOs at low-performing
companies still received their target bonus payout.

“With the SEC disclosure rules now in effect for the second year,
performance goals for annual and long-term incentive plans are sure to
attract more attention this proxy season. Although many companies are still
deciding whether to disclose performance goals used in their executive pay
programs, we expect companies will continue to focus on
shareholder-friendly core pay elements. They will also continue to
reinforce the link between pay and performance through increased
transparency and difficult but attainable performance goals,” said Kay.

About Watson Wyatt Worldwide

Watson Wyatt (NYSE, NASDAQ: 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 7,000 associates in 32
countries and is located on the Web at www.watsonwyatt.com.

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