Printer Friendly

Roundtable survey finds clear trends.

Corporate governance--and especially the red-hot topic of executive pay--has apparently been on the agenda of many boards, and practices are changing. A recent survey by the Business Roundtable, an association of CEOs of 160 leading U.S. companies, of governance practices among its members showed continuing improvements, including a continual rise in the percentage of companies that have increased pay-for-performance for senior executives.

The survey's key findings include:

Pay for performance: Almost 6 out of 10 companies (57 percent) reported an increase in the pay-for-performance element of senior executive compensation in the past year, compared to 49 percent in 2005 and 40 percent in 2004. Of the companies placing more emphasis on performance, 20 percent indicate that the performance element includes primarily long-term goals, 73 percent stress a mix of long- and short-term performance goals and only 7 percent stress short-term goals.

Board independence: Ninety-one percent of respondents have an independent chairman, lead director or presiding director--up from 83 percent in 2005 and 71 percent in 2004. The percentage of companies with an independent chairman has continued to increase, from 4 percent in 2004 and 9 percent in 2005 to 11 percent in 2006.

Executive session: Almost 7 in 10 (69 percent) of companies reported that independent (non-management) directors met in executive session at every board meeting in 2005, and 75 percent expect the same for 2006. This percentage is up from 68 percent in 2004 and 55 percent in 2003.

Director evaluations: Thirty-eight percent of companies performed individual director evaluations in 2005, and 45 percent are planning to do such evaluations in 2006, up sharply from the 27 percent in 2004. Of these companies, a growing number rely on peer reviews--38 percent in 2005, with 48 percent planning to do so in 2006.

Director qualifications: Fully 97 percent of companies say their nominating/governance committee has established qualifications for directors, up from 87 percent in 2005.


Committee meetings: Over half (52 percent) of companies indicated they have seen a "significant" increase in the number or length of meetings of the audit committee in the past two years, while 33 percent indicated a "significant" increase in the number or length of meetings of the compensation committee in the same period.

In other findings:

* Eighty-five percent of companies reported that they have retained a compensation consultant in the last year, and 53 percent of CEOs reported that their nominating/governance committees have retained a search firm in the last year.

* Ninety-three percent of companies say their compensation committees have stock ownership guidelines or requirements for senior executives, and 88 percent of companies have stock ownership guidelines or requirements for directors; 32 percent established the director guidelines within the past year.
COPYRIGHT 2006 Financial Executives International
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2006, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
Printer friendly Cite/link Email Feedback
Title Annotation:executive pay
Author:Heffes, Ellen M.
Publication:Financial Executive
Geographic Code:1USA
Date:Jun 1, 2006
Previous Article:From the editor.
Next Article:IPO market sags as M & A hits 5-year high.

Related Articles
Slight downturn expected for merit and salary-range increases.
Technology link to profitability. (IT Notes).
The salary report: Mexican CEOs earning more than global counterparts, workers pay lags behind.
Time to call it a day: labour market changes during the 1990s have resulted in increased job insecurity and increased work demands--all of which are...
Federal Reserve studies confirm electronic payments exceed check payments.
Compensation paying off: agents and brokers are revising compensation plans to encourage new sales and growth of business from both producers and...

Terms of use | Privacy policy | Copyright © 2019 Farlex, Inc. | Feedback | For webmasters