WASHINGTON, D.C., August 20, 2008 — 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, according
to an analysis of 2008 company proxy statements by Watson Wyatt Worldwide,
a leading global consulting firm.
In its analysis of 75 large, publicly traded companies, Watson Wyatt found
that 87 percent now have stock ownership guidelines and requirements for
executives, an increase from 75 percent in 2007. Additionally, 38 percent
have a claw-back policy that enables companies to recoup incentive
compensation if the financial measures underlying the incentive plans are
restated. That compares with just 23 percent in 2007.
“Shareholders are often critical of executive pay packages, and companies
are listening to their concerns by proactively developing more
shareholder-friendly pay practices,” said Ira Kay, global director of
compensation consulting at Watson Wyatt. “While not all companies have yet
to follow suit, both shareholders and the Securities and Exchange
Commission can be pleased with the trend.”
The analysis also found that many companies are making or considering
changes to their “non-core” compensation programs. Roughly one in four
companies (24 percent) has made or is considering changes to its severance
policies while 43 percent have amended or are considering amending their
change-in-control policies. Approximately one in 10 companies (11 percent)
changed its Supplemental Executive Retirement Plan in 2007.
“Companies are looking to change their non-core compensation programs,
while fine-tuning their performance measurement for core cash and stock
incentives. In the long run, this approach will improve transparency and
help ensure that executives are being rewarded for performance,” said
Andrew Goldstein, North American co-leader of executive compensation
consulting at Watson Wyatt.
The analysis also noted that companies have begun to moderate their
targeted executive pay levels and have brought 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.
For more information, read the Watson Wyatt Insider article on 2008
compensation discussion and analysis findings, available at
www.watsonwyatt.com/us/pubs/insider/showarticle.asp?ArticleID=19245.
About Watson Wyatt
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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