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March 14, 2006
Few Firms Plan to Change Compensation Programs for Proposed Rules

Just 9 percent of employers have plans to change their compensation programs in response to the Securities and Exchange Commission's proposal requiring more transparent disclosure of executive pay, according to a survey by Watson Wyatt Worldwide, a human capital consulting firm.

Seven out of 10 companies said they have no plans to change their compensation programs in response to the SEC proposal.

Watson Wyatt polled 112 compensation and human resource executives at large publicly traded companies in February.

"We believe many companies are taking a wait-and-see approach to the proposed rules," says Ira Kay, global director of compensation consulting at Watson Wyatt. "While some companies recognize their disclosures are inadequate, most want to see what the final rules entail and how other companies respond."

The proposed rules would affect executive-pay disclosure in proxy statements, annual reports, and registration statements. The proposal would require companies to provide most of this disclosure in plain English. The SEC says the proposed rules aim to make executive compensation clearer to investors. The rules would require more complete disclosure of compensation of the chief executive officer, chief financial officer, the three other highest paid executive officers, and the directors.

In the survey, 61 percent of respondents said the rules would not improve corporate governance, double the number who said the rules would improve governance.

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