July 27, 2009
Problems with Treasury’s Draft Legislation for Consultant Independence
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– Don Delves, The Delves Group
As an independent compensation consultant to boards, I should be delighted with the Treasury’s proposed legislation requiring consultants hired by compensation committees to be independent. I am not delighted. I am very concerned for two reasons:
1. Independence does not guarantee high quality consulting or high quality compensation. Anyone can hang out a shingle and call themselves a compensation consultant. Our profession is in sore need of generally accepted principles and standards, as well as a rigorous certification process for consultants.
2. This could cause a shake-up in the consulting industry, forcing firms to be either board consultants or management consultants. I am not sure this is healthy. It will also add unnecessary expense for companies, especially smaller companies. While larger firms can afford two consultants – one for management and one for the board – this is just not cost effective or operationally efficient for smaller companies.