A significant portion of large U.S. companies are notplanning to disclose performance goals for their executive pay programs intheir 2008 proxy statements, a survey by Watson Wyatt finds.
The leading global consulting firm found only 42 percent ofcompanies plan to reveal their goals for the 2007 fiscal year. Thirty-onepercent of companies, the poll finds, have no plans to disclose their goals,while the remaining 27 percent are unsure.
Meanwhile, the Securities and Exchange Commission adoptednew disclosure rules, effective for the 2007 proxy season, as part of an effortto provide investors with a clearer picture of how a corporation’s executivesare being paid. The rules ask companies to disclose their performance goalsunless providing them would result in competitive harm.
Watson Wyatt’s findings are based on a poll of legal,compensation and HR executives at 135 large, publicly-traded companies.
“Setting sufficiently challenging performance goals andappropriate corporate performance metrics is an extremely important part of theexecutive pay process,” Ira Kay, global director of executive pay consulting atWatson Wyatt, said in a statement. “The SEC has put significant pressure oncompanies to disclose their goals so that shareholders can determine ifprograms are paying for performance. However, companies are still strugglingwith the decision of whether to disclose this information.”
The poll also finds that 68 percent of companies to not planto change their approach to goal setting, though a small but growing number (21percent) intend to modify their pay programs in response to the SEC’s rules, alarge jump from the 5-percent found in a similar 2006 poll.