With investor advisory votes looming, executive compensation strategy and philosophy, pay-for-performance relationships and compensation-related risk are at the top of the list of pay topics companies are reviewing in 2011, according to the latest survey by compensation consulting firm Pearl Meyer & Partners.

All of those items have become even more important in light of the say-on-pay mandate under the Dodd-Frank Act, says PMP managing director Jim Heim.

Among other things, companies are validating their peers group to ensure they're using companies similar to their own size and industry, and reviewing their pay position strategy-for instance whether the percentile they benchmark against is valid based on their performance. They're also making sure they have strong executive summaries about their pay decisions in their proxy disclosure.

"All companies are a doing a much more rigorous analysis on their pay-for-performance analysis in particular," Heim says. Even though the Dodd-Frank required disclosure rules on PFP aren't expected until at least next summer, Heim says companies are "trying to do their homework now about the types of analyses they should be looking at to tell their story to shareholders."

Some of the biggest changes to pay plans in 2011 are expected in long-term incentive plans, according to the survey of 279 executive officers, board members and human resources professionals.

Companies are shifting their LTIPs, which typically make up the bulk of executive pay in most industries, more toward performance-based shares and continuing to migrate away from stock options. Those programs are expected to account for 47 percent of executive incentive values in 2011, up from 37 percent in 2009. Meanwhile, use of "plain vanilla" options and stock appreciation rights is expected to drop to 24 percent of award value in 2011, down from 34 percent in 2009.

In addition to a performance angle, performance-based restricted stock reduces compensation risk better and offers lower dilution than options. However, Heim says companies "need to have strong goal setting processes to ensure the right level of performance is being rewarded."

With respect to annual incentives and cash bonus programs, companies continue to tinker with program metrics. About a third of companies made changes to their annual plan measures in 2010 and another 23 percent expect to do so in 2011. Heim says most compensation committees are adding an additional measure to address concerns about compensation-related risk.

Companies are also increasing performance targets linked to incentive payouts. For fiscal 2010, 44 percent of respondents said their company increased fiscal 2010 performance hurdles from a year earlier, and 41 percent expect to raise the bar again in fiscal 2011.

Nearly all "strong performers" (those that report outperforming peers on revenue growth, profitability and shareholder return) expect to provide an annual incentive plan payout to executives for fiscal 2010 performance. More than half (54 percent) project "above target" payout levels. Among lower performing companies, 81 percent plan a bonus payout, while only 35 percent expect "above target" payouts. Strong performers use more performance-based awards, such as tying payouts to meeting multi-year goals, or vesting option or restricted share awards only upon achievement of specific performance objectives. For strong performers, such awards will account for 45 percent of expected fiscal 2011 long-term incentive value, compared to 26 percent for poor performers.

The survey also shows some companies backing off from giving compensation committees discretion to pay bonuses even when performance targets weren't met. Nine percent of companies plan to curb their boards' ability to allow discretionary payouts of performance-based awards if plan targets aren't met. In 2010, 18 percent of companies deviated from plan performance formulas to allow bonus payouts even though performance targets weren't met, down from 24 percent that did so in 2009, according to the survey results.

The survey also showed continuing downward trends in severance, change-in-control protections and certain executive perquisites. For instance, 7 percent of companies curtailed cash severance provided to executives for "without cause" terminations in 2010, and another 7 percent expect to do so in 2011. Fewer companies plan to provide for full gross-ups to cover taxes triggered by parachute severance payments following a change-in-control. In fiscal 2009, 44 percent of companies provided full gross-ups, while only 38 percent expect to do so in 2011.

The survey results shows more executives are traveling on their own dime these days: 11 percent of participants eliminated car allowances or company-provided cars in 2010, and another 8 percent expect to do so in 2011. Meanwhile, 27 percent of those surveyed discontinued executives personal use of corporate aircraft in 2010, and another 23 percent plan to do so in 2011.