In 2013, CEOs in S&P 500 firms were paid, on average, over 200 times the average worker’s salary in their firms. To avoid or minimize public outrage, managers have a substantial incentive to obscure and try to legitimize their excessive compensation. One way of doing so is to have “independent” compensation consultants recommend higher pay to the board.
A recent study by Cambridge Judge Business School’s Dr Jenny Chu, Jonathan Faasse and Professor Raghavendra Rau finds strong empirical evidence for the hiring of compensation consultants as a justification device for higher executive pay.
Read the full article [blogs.law.harvard.edu]