October 22, 2014
Study: Compensation Consultants Enable Higher CEO Pay
– Broc Romanek, CompensationStandards.com
Here’s news from Paul Hastings’ Mark Poerio from his ExecutiveLoyalty.org site:
The hiring of a special compensation consultant increases CEO pay by about 10% (per median survey results), which this Univ. of Cambridge study reports as one finding supportive of the conclusion that there is “strong empirical evidence for the hiring of compensation consultants as a justification device for higher executive pay.” Along this line, an increase in CEO pay was found to reduce the probability that a compensation consultant would be replaced by a competitor. The study reports a result reflecting on the independence of compensation committees, in that median CEO compensation was 13% lower when a board committee hired a compensation consultant than when management made the hire. See more on this blog.