Concerns Grow That Multiservice Consulting Firms May Have Conflicts of Interest for a Client's Executive Compensation
More corporate boards are hiring smaller executive-pay consultancies amid growing concern over possible conflicts of interest at big pay consultants.
Directors at companies such as General Mills Inc. and Visa Inc. recently retained smaller pay advisers after dropping large consulting firms that provide other human-resources advice to management. More boards will likely follow, spurred by a new proxy-disclosure rule, proposed U.S. legislation and the merger of two large HR consultancies.
Activist investors contend big, multiservice consultants have an incentive to recommend that directors award rich pay packages to top executives, who control more lucrative contracts for other HR consulting gigs.
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