For those wondering what's ahead for executive compensation amid ever-sharpening scrutiny of pay practices and new disclosure regulations from the Securities and Exchange Commission, executive compensation research firm Equilar has provided its take on the trends and practices it says are likely to affect companies this year.

Among other things, the report, 2010 Executive Compensation Outlook, cites changes to incentive compensation, including the amendment of performance awards, use of relative measures, and adjustments to threshold, target and maximum levels, and changes to equity compensation, such as the amendment of performance-based awards to become time-based, extended option terms, and the use of more restricted shares and stock units.

"What is clear for all companies today is the need to explore new ideas and new practices," the report states. "... Even familiar concepts must be viewed in the new light of increased regulation and shareholder participation."

As they attempt to award appropriate levels of equity while maintaining shareholder-friendly policies in an environment of gradually increasing stock prices and uncertain economic recovery, Equilar says companies are testing some unique equity compensation practices. For instance, some companies are shifting to time-based equity awards or amending their previous performance awards to become time-based, as goals for performance-based equity awards have become too difficult to set or where the achievement of those goals seems unlikely.

In contrast to a trend toward shortening option terms during the past few years, the report notes that some companies have recently decided to extend their option terms to provide more time for stock prices to rise.

Other companies are shuffling their annual equity mix, by adding more restricted shares and restricted stock units in order to provide greater stability to equity compensation programs. For example, the report notes that Exelixis began awarding restricted stock units in addition to stock options, rather than only granting options.

With performance goals set in 2008 and early 2009 likely to be unattainable, Equilar notes that a number of companies have adjusted their existing incentives. In some cases, old performance awards were amended to provide for shorter or longer performance periods. Other companies adopted relative measures so they can compare performance with similar companies. Some companies have adjusted threshold, target, and maximum levels due to the uncertain economic environment.

More companies are cutting tax gross-ups for reimbursement of certain perquisites and change-in-control payments. For instance, the report notes that General Dynamics changed its severance agreements for future executive officers to remove a provision providing for reimbursement of excise taxes upon a change of control, and stopped providing reimbursement of taxes triggered by the receipt of perquisites by its executive officers, effective for perquisites provided in the 2010 tax year. Meanwhile, Northrop Grumman Corp. eliminated tax gross-up benefits for all Named Executive Officers pertaining to personal use of company aircraft and other executive perquisites, and eliminated tax gross-up benefits related to change-in-control payments for all NEOs when it renewed CIC agreements with executives on Jan. 1, 2010.

The report also says ownership guidelines and holding requirements are among the "most widely used corporate governance practices aimed at aligning the interests of executives and directors with those of shareholders." The prevalence of Fortune 250 companies using holding requirements in addition to ownership guidelines increased steadily over the past three years to 38.6 percent in fiscal year 2008.

The complete report is available by request here.