Executive compensation consultants "must serve the company and its shareholders and remain objective in making recommendations," according to a set of best practices guidelines unveiled by the Conference Board today.
A corporate board's "compensation committee should make ‘hire and fire decisions' about consultants, establish with the consultant the scope and objectives of the project as well as overall general philosophy, and evaluate the consultant's performance at the end of a project," the statement said.
"The consultant's key responsibilities include ensuring that the committee and entire board receive information and advice needed to make the best compensation decisions," the statement said. "This involves providing necessary competitive data; offering the company independence and objectivity; showing no partiality to management, the board or the committee; and understanding the company's business strategies and issues."
The group that developed the guidelines consisted of executives of eight major companies and nine consulting firms, as well as one corporate director, all with extensive executive compensation experience, the statement said. The Conference Board develops research on business management and business economics.