January 7, 2014
Pay policies continue to receive attention due to the combination of required shareholder votes on executive compensation and increased public scrutiny. Decisions regarding executive compensation are now a central focus since shareholders now have a vote on the topic. As a result, the relationship between companies and their pay consultants has also drawn attention. It is important for companies to exercise caution not only in designing their pay structures, but also in deciding who will advise them in compensation processes.
During the past several years, the mergers of large consulting organizations and the creation of new boutique firms have continued to increase the competition for compensation-consulting dollars. The 2014 proxy season brings new opportunities for consulting firms to increase their competitive market share or lose ground to their competitors. Companies are looking for consultants that can provide expert overall pay-for-performance advice, but they also consider how a firm’s unique characteristics match the company’s vision and objectives.
Equilar looked at executive compensation consulting engagements to determine the market share across a variety of indices and industry sectors.
The 2013 Consultant League Table Report provides insight on consultants in a variety of categories, recognizing firms for their particular areas of strength. Many of the large consulting firms consistently top the rankings for market share, but categorical breakdowns reveal some of the smaller firms’ unique market niches. Review the various league tables and find where your consultant ranks among its peers.
The Equilar 2013 Consultant League Table Report provides rankings for the top national executive compensation-consulting firms. The report examines public companies and measures the success of the consulting firms across multiple metrics. Most of the league tables, except for the indices, look at all board engagements within the Russell 3000 Index®. Market share is calculated by dividing the number of engagements a consulting firm has by the total number of engagements in that particular space.
For each company analyzed, the most recent consulting firm disclosed in the proxy was taken. Companies that did not disclose a consultant were excluded from the analysis. All data included in this report is derived from annual reports and proxy statements filed with the U.S. Securities and Exchange Commission (SEC). The study looked at filings for fiscal years ending between March 1, 2012 and February 28, 2013.
Equilar calculated the market share of each consultant for board engagements in some of the most popular indices. The S&P 1500 is a composite of the large-cap, mid-cap, and small-cap.
Consultants will often hold a large number of clients in one particular sector, as their expertise can provide valuable insight into ideal executive compensation policies and structures for a specific type of company. Equilar looked at board engagements among the Russell 3000® and determined which consultants had the biggest market shares in the various sectors.