As scrutiny of soaring executive pay continues, the latest source of hand-wringing is how companies benchmark against peer groups—the group of CEOs at similar companies that compensation consultants use to help set CEO salaries and benefits packages.
Ideally, evaluating executive pay in light of what others get at companies in the same industry and of roughly the same size is a good way to gauge the market price for top executive talent. However, critics, such as proxy advisory firm ISS, say that boards are too-willing to game the process by including companies with large pay packages and then giving out the highest percentile of pay they can as an act of either industry one-upmanship or a symptom of an all-too-cozy relationship with the C-suite.
