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Shocker: Most Companies Take a Dim View of New Exec Pay Disclosure

  • The Find: New rules governing the disclosure of executive pay went into effect last year, but these much-reviled changes are unlikely to affect C-suite compensation.
  • The Source: Pearl Meyer & Partners' second annual "Proxies that Made the Grade" report.
The Takeaway: PM&P asked more than 100 mid to large-cap American companies to rate how painful the disclosure process had been on a scale of one to five, with five being 'horribly painful.' The companies gave the process a 4.2 last year. This year, at least, it's down to 3.5 percent. Respondents felt, however, that this year's filings were even less readable than last year's.

Meeting the SEC's demands seems comparable to a trip to the dentist for corporate America, and one that, by the looks of this survey, seems unlikely to affect how the majority of companies will do business in the future:

  • 65% of respondents said the new rules would not affect individual and company performance goals for your short-term incentive programs
  • 65% also said the changes did not affect the design and development of long-term incentive programs
  • 90% said the new rules had either a minor affect or no affect at all on the design of executive security arrangements (e.g., change-in-control agreements, severance agreements)
  • On a scale of 1 to 5 with one being the least impact and five the most, the effect of the detailed disclosures on executive pay was given a 2.2, with respondents evenly split as to whether they thought it would increase or decrease compensation
  • The chance the new rules would increase company performance was rated just 1.9