Executive pay seen as global concern.

• Author: Marshall, Jeffrey
• Position: Compensation

Executive pay isn't just a huge issue in the U.S.; it's a big concern of institutional investors globally, who rank it consistently among their top three issues, according to a recent survey by Institutional Shareholder Services (ISS) of 322 investor organizations around the world.

The survey, the first of its kind, according to ISS officials, found pension and investment fund managers fuming over the run-up in pay, especially for multinational corporation CEOs. One issue that drew particular ire: massive numbers of stock options, which several in the survey said was affecting company profitability and diluting their investments.

In the U.S., the new Securities and Exchange Commission rules on executive compensation disclosure, anticipated for the 2007 spring proxy season, are already creating quite a bit of agita, consultants say. Increased disclosure is likely to persuade many companies to offer cash instead of perquisites they would have to disclose, like trips on the corporate jet. Other perks could even include "buying the CEO's newspaper," says Alan Johnson, managing director of Johnson Associates, who adds that with disclosure of certain perks, "many companies could be held up to ridicule."

The SEC's requirement that companies develop a "tally sheet" summarizing all forms of executive comp may not be a major hurdle, however; Derrick Neuhauser, a senior manager at BDO Seidman LLC, says that most Fortune 500 companies appear to be developing them...