WASHINGTON, March 14, 2006 - Most U.S. companies do not have immediate plans to change their compensation programs in response to the Securities and Exchange Commission´s proposal requiring better disclosure of executive pay programs, according to a poll conducted by Watson Wyatt Worldwide, a human capital consulting firm.
Seven out of 10 companies (70 percent) said they do not plan to change their compensation programs in response to the SEC proposal. Only about one out of 10 employers (9 percent) said they will make changes, while the remaining 21 percent aren´t sure. Additionally, almost one-half (48 percent) don´t intend to change their proxy disclosures this year, while nearly one out of four (23 percent) said they will. The remaining 29 percent don´t know.
In January, the SEC proposed significant changes to the executive compensation disclosures required on proxy statements. The new rules are the most sweeping rewrite of executive compensation disclosure requirements since 1992. If adopted, they would take effect with the 2007 proxy filings. Watson Wyatt polled 112 compensation and human resource executives at large publicly traded companies in February.
"We believe many companies are taking a wait-and-see approach to the proposed rules," said Ira Kay, global director of compensation consulting at Watson Wyatt. "While some companies recognize their disclosures are inadequate, most want to see what the final rules entail and how other companies respond."
Kay also said he was surprised that relatively few employers believe the rules will help corporate governance. According to the poll, six out of 10 (61 percent) think the rules will not improve corporate governance, double the number who said the rules will improve governance.
The poll also found:
- A large majority (82 percent) think that under the existing SEC rules their current compensation committee disclosures do not fully provide the information that the proposed SEC rules call for.
- Seven out of 10 (71 percent) believe the value their employees realized from stock option exercises is less than their accounting costs, while 14 percent believe it is more than their accounting costs. The remaining 15 percent think it is about the same or didn´t know. The SEC´s proposal will require use of a company´s accounting cost for stock-based compensation as the basis for disclosing the value of grants made during the prior fiscal year.
About Watson Wyatt
Watson Wyatt (NYSE: WW) is a leading global human capital and financial management consulting firm. The firm specializes in employee benefits, human capital strategies, technology solutions, and insurance and financial services. Watson Wyatt has 6,000 associates in 30 countries and is located on the Web at www.watsonwyatt.com.
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