The current spotlight on executive pay has caused many companies to take a step back and think about the long-term implications of their executive pay policies. In early March 2009, Watson Wyatt surveyed HR and compensation executive’s at large U.S.-based companies to understand the effect the economy is having on their executive pay programs. Recognising the significance of recession and financial markets’ decline, the survey analysis provides insight on the measures adopted by companies to reduce excessive risk as well as address public criticism and shareholder concern.
The Board View
A majority of outside directors believe that the US executive pay model should be changed and adjusted to be more performance based. With the ongoing economic turbulence, most directors are of the opinion that legislation and public pressures will not lead to improved pay for performance. During March and April 2009, Watson Wyatt surveyed outside directors of large U.S.-based companies. They expressed their views on executive pay in the future and the effect the economy is having on the executive pay programs of companies where they sit on the board of directors.
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