Are remuneration consultants independent?

Are remuneration consultants independent?
Document type
Marsland, Paul
High Pay Centre
Date of publication
24 June 2015
Trends: economic, social and technology trends affecting business, Management & leadership: including strategy, public sector management, operations and production
Business and management
Material type

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In October 2013 new UK pay regulations came into force which required UK-listed companies to disclose previously undisclosed details of the consultancy arrangements in place for supporting their executive pay structures. A new requirement was imposed forcing companies to state whether and how the remuneration committee satisfied itself that advice received that assisted the committee’s considerations was objective and independent.

This report reveals flaws in the reporting of the relationship between remuneration consultants and companies, with the key points being:

  • Almost all of the companies buying remuneration services from Remuneration Consultant Code (RCG) signatories were also employing the same firm to provide additional services.
  • The value of these other commercial relationships is unclear, due to poor disclosure of fees.
  • Some companies fail to disclose a fee for each of the firms providing services to the remuneration committee. This appears to be in direct contravention of the legal requirement to do so.
  • More than half the companies in the sample used an audit firm to provide remuneration services.
  • Some companies fail to identify all of the firms whose services were relied upon for remuneration advice.
  • Not all organisations providing services to remuneration committees are RCG code signatories.
  • Five cross-selling remuneration consultants accounted for 84% of all fees paid by sample companies for remuneration services. The five firms that only provided remuneration advice accounted for just 13% of fees paid.

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