ABSTRACT
Chapter 8 is the first of two covering the professional standards of executive remuneration consultants. It discusses ethical and professional standards together with technical expertise/experience, whereas Chapter 9 concerns whether there might be a specialised advisory accreditation/qualification for executive remuneration consultants and/or a licence to practise regime. The responses of the author’s research programme interviewees regarding ethical/professional standards are generally divided between ‘positive’ and ‘mid-position’, with some ‘negative’ ones (e.g., an interviewee’s comment about ‘the differing level of quality amongst consultants’). The consensus view, however, is that although executive remuneration consultancy as a business may have problematic aspects (e.g., in relation to conflicts of interest), these are not primarily due to low ethical or professional standards of executive remuneration consultants. Indeed, these are generally seen as being at a high level with Big Four and Actuarial & Benefit Consultancy firms being noted as having ‘a strong professional standards culture’. Providing remuneration committee advisory services is seen as being ‘business advice’, as opposed to being a ‘new profession’. With the trend towards less-experienced executive remuneration consultants being ‘direct entrants’ from university, such services are starting to become a profession ‘in its own right’. As regards technical expertise/experience, the responses of interviewees are again divided between ‘positive’ and ‘mid-position’, but with some ‘negative’ ones (e.g., ‘still think there’s some bad practice and some wrong mindset within the industry’). Against the background of remuneration committees putting a strong emphasis on ‘almost political/relationship advice’ from their appointed executive remuneration consultancy firm in respect of proxy advisor/institutional shareholder body policies and guidance, the author discusses the various issues arising from the present recruitment patterns/practices of executive remuneration consultancy firms.
