The Oversight and Governance Reform Committee is looking forthe chairs of compensation committees at each company within the Fortune 250 toprovide information on how they utilize compensation consultants in settingexecutive pay. The inquiry is part of an ongoing investigation into the rolecomp consultants play at large publicly traded companies.
The Committee held a hearing in December to examineconsultants’ roles in advising boards on CEO pay, and whether or not thoseconsultants have conflicts of interests. During the hearing, the committee’s Democratic chairman, Henry A. Waxman, discussed a report – composed by his staff over theprevious seven months – when he explained that what he deems to be high paypackages for CEOs could derive from potential conflicts of interest on the partof compensation consultants that boards hire to advise them on pay, and also bythose same executives to consult on compensation inside the company and provideother services.
Waxman recently since sent a letter to Fortune 250comp committee chairs, explaining that corporate governance experts haverecommended that directors hire independent CEO pay consultants that canprovide objective advice regarding compensation. The letter asks the chairs forinformation from January 1, 2006 to the present regarding who has retainedcurrent consultants at the companies, and whether the company has disclosed informationto shareholders regarding other services provided by the consultant, if one hasdone so.