November 11, 2014
Pay policies continue to receive attention due to the combination of required shareholder votes on executive compensation and increased public scrutiny. Decisions surrounding executive compensation are now a central focus because shareholders now have a vote on the topic. As a result, the relationships between companies and their compensation consultants have also drawn increased attention. It is critical for companies to exercise caution, not only in pay plan design, but also in deciding who will advise them in compensation processes.
The last several years have seen a rise in the market share of boutique firms and independent consulting firms at the expense of full-service consulting firms. The firms atop each league table remained the same in this year’s study, but the top boutique firms are beginning to climb the rankings.
The 2015 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 who can not only provide expert overall pay-for-performance advice, but also match the company's vision and objectives.
Equilar observed executive compensation consulting engagements to determine the consulting firms’ market share across a variety of indices and industry sectors. The 2014 Consultant League Tables provide 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 their peers.
The Equilar The 2014 Consultant League Tables provide 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. The industry classifications 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, 2013 and February 28, 2014.
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 S&P 500, S&P MidCap 400, and S&P SmallCap 600.
Consultants will often hold a large number of clients in one particular sector, as their expertise can provide valuable insight into optimal 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 largest market shares across eight sectors.
Please contact Amit Batish at firstname.lastname@example.org for more information. Amit Batish is the Content Manager at Equilar. The contributing author of this article was Tiffany Chen, Research Analyst.