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CEO Pay Growth, Corporate Results Both More Moderate in 2005
On the Horizon: Greater Disclosure of Executive Retirement and Deferral Plans

NEW YORK, April 10, 2006 –Compensation for Chief Executives of major U.S. companies rose 10% to a median of $8.4 million in 2005, according to a survey for The New York Times by compensation consultants Pearl Meyer & Partners. Growth in executive pay saw a 15% increase in net income and a 6% rise in total shareholder return among the 200 companies studied, according to new public filings.

Bonuses paralleled more modest growth than a year earlier, up 7.7% to $1.8 million. At many companies, performance hurdles were raised in the 2004-2005 fiscal year to reflect an improved economic situation, which a year earlier had boosted bonus levels by more than one-third. Median salary was up 3.8% to $1.0 million.

The Times’ annual report on CEO compensation, published yesterday, detailed pay levels and practices disclosed by 200 industrial and service companies with an average market capitalization of $32 billion.

“Annual pay and performance will never move in lockstep, since compensation programs also reflect long-term financial and strategic goals,” said Jan Koors, Managing Director of Pearl Meyer & Partners. “However, they are clearly moving more in sync as more companies respond to investor pressures.”

Koors noted that investors’ keen interest in the quality of pay-for-performance plans will be stoked by the expected introduction of new SEC disclosure rules for 2007. “Access to data that in many cases is now omitted or obscured in public filings will allow shareholders to better judge for themselves whether executives are earning their keep,” she said.

The public’s window into executive pay plans will swing open dramatically in Spring 2007, when proposed new SEC disclosure rules are expected to take effect, giving investors access to a far greater range of information about executive compensation programs than is currently provided. Among the new disclosure proposals are information about a company’s compensation philosophy and the rationale behind performance-based plans; the value of retirement and other post-employment payments to an executive; more extensive data regarding the value of cash and stock components; and new and redesigned executive and Board compensation tables.

A Disclosure Preview
In fact, this year’s proxy data attests to the likely impact of increased transparency. Koors noted that corporate filings have long included a line item for the value of “other” compensation, typically executive perquisites such as use of corporate aircraft, vehicles and lodgings. Most companies have treated such items as exempt from disclosure if they were not considered reportable income to the executive. As part of its proposed overhaul of disclosure, the SEC clarified that all executive benefits and perquisites, even when not considered income, must be disclosed. With many companies including those numbers for the first time, the median value of “Other” compensation jumped 13.5% to $188,173 – a bigger proportional increase than nearly all other components, Koors noted. “The increase in perquisite values is a preview of the changed look we can expect of executive compensation under the new SEC rules,” Koors concluded.

CEO compensation programs in 2005 saw a third straight decline in stock option values, down 1.4% to $2.1 million atop a 7% decrease a year earlier. At the same time, there was a 15% rise to $1.9 million in the value of stock awards and long-term performance plans. This shift reflects governance pressure to put more compensation value into vehicles that promote long-term performance, rather than the more day-to-day stock price focus critics believe is engendered by heavy option use.

About Pearl Meyer & Partners
Founded in 1989, Pearl Meyer & Partners is recognized for its counsel to Board Compensation Committees and senior managements. The firm specializes in the evaluation, design, development and implementation of compensation programs for executives, employees and Boards, as well as issues related to corporate governance. Services also include customized marketplace surveys, organizational development and sales incentives, all supported by strong actuarial and benefits expertise. Headquartered in New York, Pearl Meyer & Partners maintains offices in Atlanta, Boston, Charlotte, Chicago, Houston and Los Angeles.

Pearl Meyer & Partners is a practice of Clark Consulting (NYSE: CLK), a leading publicly traded firm in its field, serving more than 3,800 U.S. companies nationwide with comprehensive advice on the design, financing and administration of compensation and benefit programs.

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