While a recent report on executive compensation shows companiesare seeking to limit increases for their top officers, acompensation consultant to the insurance industry says carriers hadalready adopted leaner increases before the Great Recessionstruck.

Last week, Pearl Meyer & Partners, a compensation consultingfirm, released the results of its fourth annual "PM&P On Point:Looking Ahead to Executive Pay Practices in 2013" survey.

The survey says that '"moderation' for executive pay in 2013" isthe key word as U.S. companies limit increases when there are "nomeaningful performance gains."

The online survey of 167 executives shows that one in threerespondents "said their companies will cut or freeze CEO basesalaries in the coming year."

Jim Heim, a managing director at Pearl Meyer, says in astatement, "For more than two decades, the traditional 'sweet spot'for executive salary increases was 3 percent to 5 percentannually—now companies are trying levels more directly to annualperformance by holding salaries flat or even cutting poor years andmaking bumps of 5 percent to 10 percent in strong years."

But the survey, says Meyer, is not reflective of the insuranceindustry as few in that sector responded.

John Gayley, a director at Towers Watson, heading up theinsurance compensation practice for the firm, says for years nowthe boards of insurance companies have based CEO compensation onperformance and have not given automatic pay increases.

While the PMP survey says the CEO compensation increases haveranged in the 3 to 5 percent range, insurers have been lessgenerous to their CEOs, says Gayley.

Before the Great Recession hit in 2008, he says boards wererewarding their CEOs with increases on the lower end of the range,closer to 3 percent. He adds that, typically, boards havescrutinized those increases asking, "Is this appropriate?"

Gayley notes, though, that insurers are not cutting theirexecutives' salaries, as other sectors are now doing according tothe PMP survey.

When it comes to evaluating the executives, Gayley points outthat due to the cyclicality of the insurance industry, boards lookclosely at performance beyond the balance sheet, weighing suchfactors as chief-executive decisions, company stability andeconomic conditions that can affect performance.

"It is continuing evidence of what has been a long pattern infinancial services, as well as insurance, to demonstrate thatboards are taking a closer look at performance and weaving thatinto each and every pay decision they make about senior executives'pay," says Gayley

He explains that the PMP study shows there is now more emphasison documenting pay decisions and making sure the board has theright information to make the right decision when it comes tocompensation.

"Financial services, of which insurance is a part, has had to dothat more so than others by virtue of the spotlight that has beenon executive pay within financial services," says Gayley. "Theyhave probably been at greater pains recently to make sure thateverything that they say about the decision process is welldocumented and that the evidence on which the decisions are madeare very clearly laid out and that they have enough information tomake what they feel is an appropriate decision."

This is something that is true not only of the public companies,but also mutual companies "that hold themselves to pretty highstandards."

Concerning stock-incentive awards, Gayley says that becauseinsurance regulators are so keen on companies avoiding compensationincentives that may lead to poor decision-making, the use of stockoptions has diminished over the past five years.

However, they are not going away, because they do focusexecutives' decisions on stock performance, he says. The awardsthat are given to executives focus on long-term growth over amulti-year period.