At a February 2005 conference hosted by the Investor Responsibility Research Center, Charles Elson—director of the University of Delaware’s Center for Corporate Governance—stressed the idea that boards should engage their own executive compensation consultant who does nothing but work with the board itself. In other words, the consultant doesn’t work for management.
The move, seen as critical in creating pay-for-performance packages for CEOs and other top executives, had also been urged by regulators in recent months. “I also hope compensation committees have begun to take to heart suggestions that they reexamine their relationships with compensation consultants to insure that the consultants’ work for the committee—not the executives whose pay is being considered,” asserted Alan Beller, SEC Division of Corporation Finance director, in an October 2004 speech.
