Many Companies to Withhold Disclosure of Performance Goals in 2008, Survey Finds

A significant portion of large U.S. companies are not planning to disclose performance goals for their executive pay programs in their 2008 proxy statements, a survey by Watson Wyatt finds.

The leading global consulting firm found only 42 percent of companies plan to reveal their goals for the 2007 fiscal year. Thirty-one percent 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 adopted new disclosure rules, effective for the 2007 proxy season, as part of an effort to provide investors with a clearer picture of how a corporation’s executives are being paid. The rules ask companies to disclose their performance goals unless 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 and appropriate corporate performance metrics is an extremely important part of the executive pay process,” Ira Kay, global director of executive pay consulting at Watson Wyatt, said in a statement. “The SEC has put significant pressure on companies to disclose their goals so that shareholders can determine if programs are paying for performance. However, companies are still struggling with the decision of whether to disclose this information.”

The poll also finds that 68 percent of companies to not plan to change their approach to goal setting, though a small but growing number (21 percent) intend to modify their pay programs in response to the SEC’s rules, a large jump from the 5-percent found in a similar 2006 poll.