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The Harvard Law School Forum on Corporate Governance & Financial Regulation: New evidence on compensation consultants and CEO pay

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]