Article | Journal of Accounting & Economics | April 2010

Executive Pay and 'Independent' Compensation Consultants

by K. J. Murphy and Tatiana Sandino


Executive compensation consultants face potential conflicts of interest that can lead to higher recommended levels of CEO pay, including the desires to "cross-sell" services and to secure "repeat business." We find evidence in both the US and Canada that CEO pay is higher in companies where the consultant provides other services, and that pay is higher in Canadian firms when the fees paid to consultants for other services are large relative to the fees for executive-compensation services. Contrary to expectations, we find that pay is higher in US firms where the consultant works for the board rather than for management.

Keywords: Executive Compensation; Compensation Consultants; conflicts of interest; CEO pay; board of directors; director pay; corporate governance; disclosure; Conflict of Interests; Governing and Advisory Boards; Corporate Disclosure; Executive Compensation; Corporate Governance; Consulting Industry; Canada; United States;


Murphy, K. J., and Tatiana Sandino. "Executive Pay and 'Independent' Compensation Consultants." Journal of Accounting & Economics 49, no. 3 (April 2010): 247–262.