A 61 percent majority of chief financial officers at leading U.S. technology companies feel that shareholders should have a say on executive compensation plans, according to a new survey.
Accounting and consulting firm BDO Seidman surveyed 100 CFOs at companies with revenues ranging from more than $100 million to $5 billion and found that only 31 percent said their companies allowed shareholders to vote on their executive compensation plans, compared to 69 percent that did not.
Meanwhile, 67 percent of the CFOs said their company's compensation plans have been impacted by regulatory changes focused on improved disclosure, and 65 percent believe that Section 404 of Sarbanes-Oxley, which deals with auditing a company's internal controls, has led to improved processes.
Two-thirds (67 percent) of CFOs at technology businesses indicate that their company's compensation plans have been impacted by legislative and regulatory changes that focus on improved disclosure, such as Section 409A of the Tax Code, which deals with nonqualified deferred compensation plans, and FAS 123R, a Financial Accounting Standard that deals with share-based payments. Of those impacted, over 27 percent described the impact as high, 37 percent as moderate and 36 percent as low.
Despite the impact on compensation plans, 81 percent of the companies indicated these disclosure changes have had little impact on their ability to attract and retain talent. When asked which financial tool is most effective in recruiting, retaining and motivating executives in the technology industry, 42 percent cited restricted stock and 38 percent cited stock option grants. Grants of profit interest and stock appreciation rights were cited by 11 percent and 9 percent, respectively, of the CFOs.
When asked which financial reporting requirement poses the greatest challenge, in terms of compliance, a large percentage of CFOs identified both Section 404 (49 percent) and FIN 48 (36 percent), a FASB Interpretation that deals with accounting for uncertain tax positions. Only 12 percent cited 409A, while 3 percent said it was other requirements.
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