A poll of 172 leading executive pay and benefits consultants reveals that 73 percent said that the biggest challenge for executive compensation in 2004 will be "structuring plans to meet increased shareholder scrutiny." In addition, 73 percent also said that senior executive retirement plans (SERPs) will have an increased role as a solution for overall compensation packages.
The survey also revealed that 61 percent of the respondents believe "the executive compensation committee chair of public companies" will have more influence on executive compensation trends in 2004 than any other executive.
Further, the experts said that the positions that will require the greatest need for a new compensation structure are president/CEO (53 percent) and board members (41 percent). In addition, the prediction for the most significant CEO compensation trends for 2004 was "CEO pay tied to corporate cash earnings" (41 percent) and "increased restrictions on cash-out of long-term incentive" (32 percent). The polls were conducted November 18 - 21, 2003, by Clark Consulting (NYSE:CLK), the largest public executive compensation and benefits firm. .
According to Tom Wamberg, chairman and CEO of Clark Consulting, "This year was the culmination of watershed events for executive compensation, with the Dick Grasso incident and the efforts by public companies like GE to tie executive compensation to corporate goals. There is tremendous pressure on compensation committees to exceed shareholder expectations with the proper compensation structure. Finding the right solutions and the right vehicles to properly structure CEO and executive pay is complex. These solutions must be custom tailored to the key drivers of each company." .
Full survey results are below:
1. What will be the most significant CEO compensation trend in 2004?
- CEO pay tied to corporate cash earnings 41%
Increased restrictions on cash-out of long-term incentive pay 32%
- Caps in CEO compensation 24%
- Increased usage of non-qualified deferred compensation 3%.
2. In 2004, what will be the biggest challenge in structuring executive compensation at publicly held companies?
- Structuring compensation plans to meet increased shareholder scrutiny 73%
- Meeting FASB and GAAP standards and IRS regulations 14%
- Drafting compensation plans to meet competition for top-tier executives 6%
- Meeting SEC rules and regulations 5%
- Finding appropriate funding vehicles for executive compensation 2%.
3. In 2004 what position will yield the most influence on the structure of executive compensation at publicly held companies?
- Chairman of the board compensation committee 61%
- Shareholders 19%
- CEO 14%
- SEC 6%.
4. In 2004, which position will have the greatest need for a new compensation structure?
- President, CEO, Chairman 53%
- Chairman of the board compensation committee 41%
- Vice Presidents 6%
- Unit or division Manager 0%
- Highly compensated sales executives 0%.
5. In 2004, what role will senior executive retirement plans (SERPs) play in compensation packages?
- Increased role 73%
- Decreased role 14%
- No changes from 2003 13%.
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