With the public growing more ornery by the day over the compensation of corporate executives, companies in droves are acting with great speed to add restrictions and limitations to their pay policies, according to a new Watson Wyatt survey.

As portrayed by the research results, the changes are sudden and dramatic. In a similar study done just three months ago, 21 percent of responding companies said that they had frozen executive salaries. In the new survey of 145 companies, performed the first week of March, that number soared to 55 percent.

In fact, 10 percent said this month that they have actually reduced top managers’ pay — while just 2 percent were in that category in December. And an additional 13 percent expect to cut top-management pay this year, or are considering it.

Also startling is that, when asked three months ago whether they expected to freeze executive compensation in the following 12 months, only 20 percent said yes. Yet almost three times that many of the companies surveyed in March have already done so.

Not only is present pay being frozen, but plans for future merit increases are being scaled back. That was the case for 48 percent of the surveyed companies, compared with 30 percent three months ago.

To most top executives, of greater import than salary limitations are changes to incentive compensation plans, especially long-term incentives, which constitute a majority of their income. A third of the respondents said they expected the dollar value of long-term incentive grants to be lower this year than in 2008, compared to only 4 percent who anticipated an increase. The average decrease was expected to be 35 percent. These numbers are not very speculative, since most companies have decided on 2009 pay packages by now.

Only 12 percent of respondents have reduced eligibility or participation in long-term incentive plans, and 11 percent have decreased the maximum award opportunity, but both numbers were three or four times higher this month than in December.

As for annual incentives, the proportion of companies reducing target bonus opportunities and plan eligibility more than doubled, to 9 percent and 7 percent, respectively.

Also increasingly in vogue are clawback policies that seek to recoup compensation paid to poorly performing executives. Almost a quarter of the surveyed companies (23 percent) have implemented such provisions, up from 13 percent in December.

The survey results are “very reflective of what’s going on in the marketplace,” confirmed Derrick Neuhauser, a senior manager in the compensation and benefits practice at BDO Seidman. Limiting executive compensation, he said, is a response to “a fear of the unknown, a concern that the recession may last longer than anyone thinks.” Any company that sees a competitor reigning in pay is very likely to do the same, he added.

Andrew Goldstein, Watson Wyatt’s North American co-leader of executive compensation, agreed. He called it “a bit of a herd mentality — once you get a couple of big moves, other companies jump on it.”

But Goldstein pointed out that companies making the policy changes are probably not motivated much by the money they’ll save on compensation payouts. “Let’s face it, at the end of the day, when you add up the cost savings they’re not much,” he said. “It’s a shareholder and employee relations strategy. A salary freeze or cut makes a fairly dramatic statement to those constituencies.”

Despite the new proclivity for reigning in top management’s pay, going forward there will be fewer of these changes — at least if you take companies at their word about their future plans. For example, only a small fraction said they expect to freeze salaries in the next year, suggesting that most of the ones inclined to do so have already put the new policy in place.

But such expectations are fragile. “It may be their best prognostication, but it’s a very dynamic economy right now,” noted Goldstein. “Companies that we’re working with on their annual bonus and long-term incentive plans can barely see three weeks out, let alone 12 months or three years.”

In fact, it is highly likely that companies will continue to deflate the value of long-term equity incentive grants. Those that aimed, for 2009, to keep that value relatively on par with what they granted last year had no choice but to award an abnormally high number of shares, because of the falloff in stock prices. That dilutes shareholder value and cannot be sustained over the long term, unless stock prices recover significantly.

Observed Neuhauser, “If there is a big [stock-price] uptick, you’re going to have a lot of options with a low exercise price, and then you’ll see a different kind of shareholder outrage.”

Meanwhile, are the pay limits just today’s news, likely to fall by the wayside when the economy improves? Only 40 percent of survey respondents strongly believed so (4 or 5 on a five-point scale).