Most Companies Moderately Concerned About Comparing Pay, Performance

Sixty-four percent of companies surveyed by Towers Watson & Co. are moderately concerned about having to show the relationship between executive pay and corporate performance, as required under the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Only 10 percent are greatly or very concerned, while 26 percent are not very concerned or not concerned, according to findings of the July 28 survey.

The SEC plans to propose and finalize implementation rules for the Dodd-Frank act’s provision on executive pay and corporate performance sometime between August and December, although there is no indication they would take effect for the 2012 proxy season, Steven Seelig, executive compensation counsel, Towers Watson Center for Research and Innovation, said in an email.

Some 35 percent of responding companies believe it is too soon to tell what influence contrasting executive pay with corporate performance will have on shareholder advisory votes on executive compensation, while 28 percent believe it will be moderate, 10 percent significant, 3 percent great, 12 percent not significant and another 12 percent none.

Only 20 percent of companies already provide additional information in their compensation disclosure and analysis statement describing the alignment between executive pay and key performance metrics, a Towers Watson report on the survey said.

Some 34 percent of companies responding believe proxy-voting advisory firms are somewhat influential on shareholders in their say-on-pay voting, while 29 percent believe they have been influential, 21 percent very influential, 11 percent not influential and 5 percent extremely influential.

But 44 percent of the companies surveyed believe proxy advisory firms have been somewhat influential on executive pay design, while 24 percent believe they have been influential, 14 percent very influential, 13 percent not influential and 4 percent extremely influential. Overall, the findings suggest say on pay “has been a catalyst for further refinement of executive pay programs and governance processes,” according to the report.

Some 91 percent of companies surveyed have made or are planning or considering at least one change in pay-setting process for 2012 as a result of their experience in the first-ever say-on-pay voting, according to the findings.

Executive compensation executives at 179 U.S. companies were surveyed June 16-29.

Filed by Barry B. Burr of Pensions & Investments, a sister publication of Workforce Management. To comment, email editors@workforce.com.

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