US firms withholding pay-performance data

Sixty percent of US public companies have conducted pay-for-performance analyses this year but have not revealed the results to shareholders, according to a study by professional services firm Towers Watson.

Of those firms that analyzed the relationship between the pay levels of executives and performance, 63 percent neither disclosed that they had conducted the research, nor the results of the analysis in their 2014 proxy statements, Towers Watson says. Another 30 percent say they did disclose the results while 7 percent told shareholders that they performed the analysis but did not reveal the details.

More than three quarters of the companies that conducted analyses but did not reveal the results in 2014 say they are waiting for the SEC to issue new disclosure guidelines. A third added that they don’t want to set a precedent that would require them to disclose results regularly in the future. A fifth say the analysis didn’t reveal information that would be material to shareholders.

The number of companies who did not tell shareholders that they conducted a pay-for-performance analysis has increased from 44 percent two years ago.

‘The survey confirms that leading companies are paying close attention to pay-for-performance alignment, and are conducting comprehensive analyses using multiple definitions of pay and performance to better understand how their executive pay programs are working,’ Steve Kline, leader of Towers Watson’s executive compensation consulting practice in the eastern central US, says in a statement on the company’s web site.

Tower Watson also says that the companies that do analyze pay-performance-data do so in a way that is not likely to comply with expected SEC requirements. Ninety-six percent of them compare executives’ performance with that of a peer group defined by the company. Almost 80 percent use a three-year period to measure performance while 60 percent use a different definition than the one in SEC documentation.