Compensation Consultants
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Compensation consultants should be independent fo management and give neutral and objective advice to compensation committees. The advice comes from a soon to be released report from the Conference Board. The Dealing in Good Faith: The Evolving Role of the Compensation Committee and its Relations with Consultants, report lays down minimum behavior. This includes the committee-consultant relationship including consultant retention, scope of work, oversight, monitoring and where needed dismissal. Dr Carolyn Kay Brancato, Director of the Global Corporate Governance Research Center and the Directors' Institute at The Conference Board, commented "It is now crystal clear that compensation committees should retain and control the terms of the relationship with any outside consultants whom they hire," she continued "There is, however, much discussion about whether consultants who provide advice to the compensation committee can also provide advice and sometimes other services directly to management." One problem highlighted was that of "dueling" consultants with duplicate workloads through advising the board and management separately. The Conference Board report does not rule out the consultant doing any extra work. Monitoring and oversight though is essential for the consultant to remain impartial. The consultant's role and scope of work should be clearly articulated and monitored by the compensation committee, utilizing the same oversight processes that the board and its committees employ in other areas Deciding which corporate governance rules to implement, the Board will have to consider certain baseline laws such as Sarbanes-Oxley Act of 2002 and national stock exchanges. Decisions in the courts of Delaware will also have a bearing at most companies.
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Similar Areas Selected Books Keywords Sarbanes-Oxley and compensation Sarbanes-Oxley and consultants
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