Expert Perspective - Rewards
by Michael Dennis Graham
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May 31st, 2010
Expert Perspective by Grahall’s OmniMedia Editorial Board
On April 30, 2010 Towers Watson released a statement about some changes to their Executive Compensation business (Towers Watson Aligns Executive Compensation Consulting Strategy With Evolving Range of Client Needs). The press release announces that: “ After an extensive three-month review of the executive compensation (EC) consulting market in the U.S., Towers Watson today reaffirmed its commitment to the EC consulting business, while reorienting its strategic approach to meet the evolving needs of clients.” The press release goes on to say that for Boards that want separate compensation advisors for the board and management, TW “will focus on providing EC consulting services to management” and an “independent, non-affiliated consulting firm, Pay Governance LLC will be formed, staffed by former Towers Watson EC consultants who will serve as Board-level advisors.”
Well that’s a very market savvy approach although we are pretty surprised that TW needed an “extensive review” to determine that independence is a necessary configuration for providing executive compensation services to Boards.
Continue reading “Doing What’s Right” »
Filed under: Expert Perspective - Rewards
Tags: compensation consultants
Expert Perspective - Rewards
by Michael Dennis Graham
|
Share/Save
May 31st, 2010
Expert Perspective by Grahall’s OmniMedia Editorial Board
In their May 6th, 2010 article published in Bloomberg (CBS Overpaid Moonves $28 Million in Study of Chief Executives) authors Jessica Silver-Greenberg and Alexis Leondis write: “Pay expert Graef Crystal, a former adviser to Coca-Cola Co. and American Express Co., has concluded that pay for performance is a fiction. Using formulas he developed over 30 years in the business, Crystal crunched the numbers to see whether higher shareholder returns, the gold standard of performance for investors, led to higher pay, and vice versa. No matter how he sliced the data, the answer was no.”
Time and time again we see overly simplified answers to highly complicated questions about CEO pay. We have written in several occasions about the imprudence of broadly applying presumptions gleaned from ill-conceived studies of limited segments. (See for example: Typical Examples Aren’t So Typical and The Hurd Locker.
This “research” by Crystal again follows that well trodden but pointless path. Let’s deconstruct what little we know of about Crystal’s “formulas” based on what is described in the article:
Continue reading “Performance and Pay: The Missing Links” »
Filed under: Expert Perspective - Rewards
Tags: Pay for Performance
On April 30, 2010 Towers Watson released a statement about some changes to their Executive Compensation business (Towers Watson Aligns Executive Compensation Consulting Strategy With Evolving Range of Client Needs). The press release announces that: “ After an extensive three-month review of the executive compensation (EC) consulting market in the U.S., Towers Watson today reaffirmed its commitment to the EC consulting business, while reorienting its strategic approach to meet the evolving needs of clients.” The press release goes on to say that for Boards that want separate compensation advisors for the board and management, TW “will focus on providing EC consulting services to management” and an “independent, non-affiliated consulting firm, Pay Governance LLC will be formed, staffed by former Towers Watson EC consultants who will serve as Board-level advisors.”