According to RiskMetrics’ revised policies for the 2008 proxy season, companies should disclose retrospective performance targets to allow shareholders “to better assess bonus plan results and not just rely on vague references to performance outcomes.” RiskMetrics now wants public companies to write the compensation discussion and analysis sections in their regulatory filings more clearly.

Rules passed last year by the Securities and Exchange Commission require companies to disclose how they set executive pay, but agency staffers have found that many public companies are not adequately disclosing such procedures.

Formerly known as Institutional Shareholder Services, RiskMetrics is also adding examples of “best pay practices,” such as severance agreements that exclude excise tax gross-ups, and has expanded its consideration of “poor pay practices” to include perks to former executives and excessive disparity between the pay of a company’s CEO and CFO.

RiskMetrics rates public companies based on executive pay, shareholder value and governance benchmarks, among other measures. The group also often recommends specific proxy proposals based on whether a company has a good grade or a poor one.

RiskMetrics has also set up five global principles on say-on-pay proposals, including the clear disclosure of executive pay arrangements and the use of independent compensation committees. It expects the first management proposal for a shareholder vote on executive pay programs to appear on a ballot in 2008.

Filed by Nicholas Rummell of Financial Week, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.