Human Resources: New Book Dispels Executive Compensation Myths

WASHINGTON, September 11, 2007 - The executive pay-for-performance model is
not only viable, it is essential to the continued success of corporations
and the U.S. economy, according to a new book by Ira T. Kay, Ph.D., and
Steven Van Putten, executive compensation consultants at Watson Wyatt
Worldwide, a leading global consulting firm.

In Myths and Realities of Executive Pay (Cambridge University Press, $25),
Kay and Van Putten draw upon extensive research and decades of experience
consulting with major corporations to separate fact from fiction
surrounding executive compensation. By studying the relationship between
pay and performance at 1,000 U.S. companies, they also show how today's
executive pay model significantly improves corporate performance and plays
an integral role in generating the most productive economy in the world.

"Our research clearly demonstrates that despite all the statements to the
contrary, in most companies there is strong alignment between pay and
performance," said Kay, who has helped employers design and implement
executive pay programs over the last 30 years. "The executive pay model has
successfully created an economic juggernaut, driving corporate performance
that has resulted in investment returns for millions of shareholders,
funded pensions and retirement savings plans now worth trillions, and
contributed to significant U.S. economic growth."

"Among the most prominent myths is that executives are paid far more than
they are worth in relation to the value they create for shareholders," said
Van Putten. "In reality, executives receive a very small portion of the
economic value they helped create for shareholders." For example, CEOs of
the Standard and Poor's 500 received, on average, 1.26 percent of the net
income value generated by the corporations they manage.

The authors also offer information that dispels the myth that pay for
performance does not exist in corporate America. While Kay and Van Putten
acknowledge some notable instances of pay for mediocre or poor performance,
their research shows these cases are not indicative of the vast majority of
companies. And, in dispelling the myth that executive pay only rises, they
prove that high executive pay levels actually correlate with and contribute
to high company performance.

"Ultimately, the executive pay model works because of the incentive effect
that underpins the pay-for-performance approach," said Van Putten. "If you
design incentives for management that maximize long-term shareholder value,
an executive will work hard to create wealth for shareholders."

Myths and Realities of Executive Pay also answers important questions about
corporate executive pay programs:

What actions can compensation committees take to foster a
pay-for-performance environment?
When designing and implementing long-term incentive programs, what should
be considered to improve business results and enhance shareholder
alignment?
How can stock-based incentives be used to make managers think like owners?
How can companies align incentives for a broad range of employees in an era
of reduced eligibility in stock-incentive programs?
What are the biggest challenges facing companies that are moving away from
stock options and toward alternative pay vehicles?
Myths and Realities of Executive Pay will help compensation committee
members, human resource executives and other managers in their ongoing
efforts to develop and implement pay programs that attract, motivate and
engage top executive talent.

"The controversy over CEO pay will likely continue into the foreseeable
future. Corporate America should keep doing what it does best: create
enormous wealth for shareholders," concludes Kay.

For more information about Myths and Realities of Executive Pay, visit
watsonwyatt.com/mythsandrealities.

About the Authors
Ira T. Kay, Ph.D., global practice director of executive compensation
consulting at Watson Wyatt Worldwide, is a nationally recognized expert on
executive compensation. He has helped U.S. public, private and
international companies develop annual and long-term incentive plans to
increase shareholder value. Dr. Kay has written and spoken extensively on
executive compensation issues and conducted research on executive pay,
stock ownership and stock options. He is a co-author of the book The Human
Capital Edge; author of CEO Pay and Shareholder Value: Helping the U.S. Win
the Global Economic War; and, Value at the Top: Solutions to the Executive
Compensation Crisis.

Steven Van Putten is the U.S. east division practice leader of Watson
Wyatt's executive compensation consulting practice. He focuses primarily on
advising compensation committees and senior management on executive and
director compensation matters. Mr. Van Putten has spoken and written on
executive and incentive compensation, and specializes in the design and
development of annual and long-term incentive programs that drive business
strategy and support organizational objectives. He is also an expert on FAS
123(R) and its implications for stock-based incentives.

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 7,000 associates in 31
countries and is located on the Web at watsonwyatt.com.