Paying for Advice: The Role of the Remuneration Consultant in U.K. Listed Companies

摘要: Compensation consultants are an integral part of the process determining executive pay in large listed companies. This study reports interview-based research with protagonists setting compensation twelve FTSE 350 companies and addresses why used, what they do, how perceived. Consultants have several important roles. Firstly, act as experts, providing market data advising on plan design implementation. Because this role, not only guide their clients to requirements market, also help create those selfsame practices norms. They a role liaison institutional shareholders, either or behalf committee. Companies committees select based reputation, personal contacts playing choice. use impression management techniques ensure that reputations remain strong. Reputation is for all parties, acts legitimize decisions remuneration committee increasingly contentious area. However, there much debate about consultants' independence practices, which could reduce such legitimacy. Article considers legitimacy evidenced, ways working maintain it. contributes literature by taking qualitative approach, explanations current practice give background context ongoing debate. I. INTRODUCTION 362 II. REVIEW OF PRIOE RESEAECH 364 A. The Consultant Expert 1. Providing "Market" Data 2. Advising Scheme Design 366 3. Impression Management 367 B. Influence Level Structure Executive Pay 368 C. Using Confer Legitimacy Committee's Decisions 370 III. RESEARCH APPROACH 373 IV. FINDINGS 375 How Choose Their 377 380 Intermediary 384 D. Legitimating Device 387 E. Conflicts Interest Appointment More Than One 388 F. An Argument Against Use ......... 391 V. DISCUSSION 392 VI. CONCLUSION 395 Introduction determination compensation1 work encompasses supplying comparator companies, advice choice schemes, modeling implications suggested taxation, preparation documentation, implementation selected shareholders. acknowledged experts field. There is, however, catch. It has been suggested, both exconsultants regulators, conflicts interest can lead biases result lax structures excessive levels pay.2 Despite widely held view, academic equivocal.3 Although concerns over date back two decades, although studies considered at least some aspect consultant, until recently, very few articles had directly examined impact pay. Regulatory developments changed this. …