Report Fills in 2010 Exec. Comp. Landscape View

January 22, 2010
(PLANSPONSOR.com)–A new report from a California-based executive
compensation research firm paints a picture of a changed 2010 executive compensation
landscape amid continuing attention from politicians, regulators, and the
public.

Among the
issues addressed in Equilar Inc.’s 2010 Executive Compensation Outlook Report:
giving executives salary bumps instead of traditional perks, clawback
policies designed to recoup ill-gotten
compensation from executives; and some companies increasing salary to make up
for recent cutbacks because of the economic downturn.

“As attention to executive
compensation remains high, the government and the media have magnified their
focus on more granular details of the pay equation,” Equilar wrote in the study
report, replete with examples based on data in corporate proxy statements. “All
aspects of compensation packages are under greater scrutiny, including the
process behind setting pay.”

Findings in the Equilar report include:

• Clawback
  policies “have enjoyed a surge in popularity over the past four years,” rising from
  17.6% in 2006 to 72.9% in 2009 at publicly traded Fortune 100 firms. Some 33.3%
  of companies disclosing a clawback policy amended or implemented the policy
  during 2009. “In addition to new policies emerging, it is likely that
  compensation recovery policies will continue to grow in scope and employee
  coverage,” researchers noted.

• Nine employers have brought
  salary levels up to their pre-downturn levels; at least 40 companies slashed
  compensation during the last half of 2008.  

• Some companies gave salary hikes of more
  than $10,000 to make up for discontinued perks such as car and travel allowances and
  financial planning.


• Employers continue moving from performance-based to
  time-based equity awards. “Faced with the realization that performance goals set in 2008 and early
  2009 would likely be unattainable, a number of companies adjusted their
  existing incentives,” the report said. “In some cases, old performance awards
  were amended to provide for shorter or longer performance periods. Other companies
  adopted relative measures so they can compare performance with similar
  companies.” 
  

• Overall equity compensation
  policies continue to be unclear because of a still struggling economy. “With
  stock prices gradually increasing and economic recovery uncertain, it is
  extremely difficult to plan for the future,” the report declared. “Companies
  are attempting to award appropriate levels of equity while maintaining policies
  that are shareholder friendly.” The report provides several examples of companies switching from
  performance-based to time-based equity compensation and instances of companies
  extending option terms to provide more time for stock prices to increase. 

More employers dropped