While the topic of executive pay is a hot one in the U.S., Watson Wyatt consultant Robert Levasseur says “we’re hearing a lot of talk but not a lot of movement” on the issue here in Canada.

According to a recent Watson Wyatt survey out of the U.S., the majority of outside directors believe American companies need to change their executive pay programs. Seventy per cent of directors believe executive pay opportunities will decline over the next two years by a moderate to great extent. Thirty-four per cent of companies, meanwhile, have already reduced executive pay (salaries, target bonuses and/or long-term incentive award levels), with another 6% planning to do so in the next six months.

Levasseur, senior consultant, executive compensation, at Watson Wyatt’s Toronto office, says he expects lower executive compensation to take the form of lower grants of stock options but for now, “no one seems to want to be the first mover on anything.”

Half of respondents (49%) to the Watson Wyatt survey have changed or plan to change the types of long-term incentive plans with many placing more emphasis on performance-based plans, including performance-based shares (53%) and performance cash plans (26%).

Sixty-eight per cent of directors said their board or compensation committee is not concerned or only slightly to moderately concerned about the retention of high-performing executives. Eighty-two per cent of directors do not believe legislation and public pressure will significantly improve pay for performance.

“It’s time to re-examine long-term incentive plans and compensation in general and whether it actually does pay for performance, and whether the system actually works in both boom and bust times,” says Levasseur.