Administration November 12, 2009

CEOs See Company Stock Ownership Levels Decline

November 12, 2009 (PLANSPONSOR.com) - Chief executive officers at the nation’s largest companies saw the value of their company stock ownership plunge last year as the U.S. equities market declined, according to an annual study by Watson Wyatt.

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A Watson Wyatt press release said the study found that the total value of CEO stock ownership and outstanding equity awards and bonus payouts for CEOs decreased by 42% in 2008, more than the 34% decline experienced by a typical shareholder at those companies. In aggregate, the CEOs analyzed in the study lost a combined $53.7 billion – roughly $55 million for the average CEO – in 2008, compared with $3.2 trillion for shareholders of the same set of companies.

The value of broad-based employee stock option grants declined by 17% in 2008. Realized gains from employee stock option exercises declined by an average 55% last year, from $54 million per company to $24 million.The estimated in-the-money value of employee stock options outstanding declined by approximately $100 billion for the companies in the study.

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The Watson Wyatt survey also found that compensation committees continue to structure CEO pay programs so companies with better performance deliver higher realizable pay to their CEOs than low-performing companies. The median CEO at high-performing companies has a three-year aggregate realizable long-term incentive value that is 150% larger than at low-performing companies – $2.3 million versus $0.9 million in 2008.

Watson Wyatt’s “2009/2010 Report on Executive Pay: Moving Beyond the Financial Crisis” is based on public data from 982 companies in the S&P Super 1500 that filed proxies before July 2009.

To view the report, visit www.watsonwyatt.com/ExecPay.
Benefits November 12, 2009

Investors not Panicking over Retirement Savings Losses

November 12, 2009 (PLANSPONSOR.com) - American investors are optimistic they will recoup losses from the recession and are exploring new options to build their retirement savings, according to a survey by Prudential Financial, Inc.

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Survey respondents estimate they lost more than a third of their assets during the downturn, yet 62% said they think they can grow back the money they lost in their workplace retirement plans, and more than two-thirds of this group thinks it will be within five years, according to a press release.

Eight in 10 respondents acknowledged a need to start rebuilding their savings after the recession, and 73% of retirees said they are exploring new ways to grow their assets.

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Although most respondents are optimistic they can grow back the money they lost, they are still shying away from aggressive portfolios. Seven in 10 say that being too aggressive with investments is riskier than being too conservative, compared with survey results from two years ago when respondents were evenly split on the same question, the press release said.

Other than investing conservatively, many have made other sacrifices to balance their investment losses, such as cutting back on spending (54%) and postponing retirement (41%).

Following retirement savings losses during the recession, investors are re-evaluating their overall approach to retirement planning, the Prudential survey found. More than three-quarters (77%) of those surveyed said they will pay more diligent attention to their investments following the recession.

Nearly half (48%) are looking to the Internet for financial guidance, compared to 37% before the market decline; however, two-thirds said they would trust a financial professional for information and guidance on how to best manage their retirement savings and investments.

In addition, two-thirds indicated they would likely pursue a solution that offered guaranteed income, and three-quarters said a product with guarantees for lifetime income, protection of principal, and opportunities to lock in market gains would be important or nice to have as part of their portfolio. Seven in 10 said they would put money back into the stock market if protected by such income guarantees.

Sixty-six percent said their preference for learning more about guaranteed income would be by talking to a financial professional. Prudential surveyed 1,001 Americans ages 45 to 75 with $100,000 or more in retirement savings.

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