WASHINGTON, September 6, 2006 - A majority of corporate HR and compensation
executives believe that the Securities and Exchange Commission´s new
executive pay disclosure rules will not have much of an impact on executive
pay levels, according to a poll by Watson Wyatt Worldwide. Additionally,
only a handful of companies polled have plans to change their corporate
compensation programs.
The SEC´s new rules are the most sweeping rewrite of executive compensation
disclosures since the early 1990s. They were adopted by the SEC in July
and will take effect with the 2007 proxy filings. In response to the
rules, Watson Wyatt polled nearly 200 compensation and human resource
executives at large, publicly traded companies.
Only 28 percent of those polled said the rules will decrease executive pay
levels, while a majority (54 percent) said the new rules will not have any
effect on executive pay levels. Three percent think that the rules will
lead to higher pay levels, and the remaining 15 percent were unsure. In
addition, most of those polled (73 percent) said the new rules will not
improve corporate performance, compared with 11 percent who think they
will.
"The new rules may not have a large impact on executive pay levels or
corporate performance, but they will strengthen the link between the two,"
said Ira Kay, global director of compensation consulting at Watson Wyatt.
"While executive pay-for-performance programs have generally been working
well throughout corporate America, the greater transparency created by the
rules should ensure that they continue to do so."
Still, companies are not planning immediate changes to their compensation
programs in response to the rules. The poll found that only 5 percent of
those polled plan to change their programs. Nearly half (49 percent) are
not planning changes, and 45 percent have not yet decided.
"For now, most companies plan to stick with their current pay programs,
although that may change over the long term," said Kay. "The new rules
will add pressure on companies to increase their reliance on
performance-based compensation and decrease the value of supplemental
retirement plans, severance packages and perquisites."
About Watson Wyatt Worldwide
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, investment consulting, and
insurance and financial services. Watson Wyatt has 6,000 associates in 30
countries and is located on the Web at www.watsonwyatt.com.
Contact
Ed Emerman, 609/452-5967, eemerman[at]eaglepr.com
Emily Rieger, 703/258-7634, emily.rieger[at]watsonwyatt.com