HR Execs Unfazed by SEC's New Pay Rules

By Dominic Jones on September 6, 2006

By IR Web Report Staff

ONLY five percent of companies plan to change their executive compensation practices before the Securities and Exchange Commission’s sweeping new pay disclosure rules kick in next year, a new survey has found.

Adopted in July, the SEC’s new rules take effect with the 2007 proxy filings. They will require greater disclosure, in plain English, of a wide range of compensation information, including potentially explosive details of executives’ pension and deferred-compensation accruals.

However, a poll by Watson Wyatt Worldwide of almost 200 compensation and HR executives at large-cap companies found that 49% are not planning changes while 45% have not yet decided.

Pressure for performance-based pay

“For now, most companies plan to stick with their current pay programs, although that may change over the long term,” Ira Kay, global director of compensation consulting at Watson Wyatt.

“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.”

Despite Kay’s predictions, most of those polled don’t seem fazed. Only 28% said the rules will cut executive pay levels, while 54% said the new rules will have no effect. Oddly enough, 3% of those polled think that the rules will lead to higher pay levels.