A majority of corporate HR and compensation executives believe that the Securities and Exchange Commissionís 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 SECís 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.
ìThe new rules may not have a large impact on executive pay levels or corporate performance, but they will strengthen the link between the two,î said Ira Kay, global director of compensation consulting at Watson Wyatt. ìWhile 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.î
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.
ìFor now, most companies plan to stick with their current pay programs, although that may change over the long term,î said Kay. ìThe 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.î
Most see new disclosure rules having little impact on executive pay
Watson Wyatt Poll Finds Very Few Companies Are Planning to Change Compensation Programs
