Using a sample of U.S. S&P 1500 firms from 2007-2009, we provide new evidence showing that CEOs of firms engaging BIG6 consultants receive lower equity payments and lower total compensations compared to that of firms engaging SMALL consultants. In addition, we also find that a switch in a firm's...

Critics allege that executive compensation consultants face potential conflicts of interest (lack of independence) that might lead to higher CEO pay. Conflicts of interest include the desires to "cross-sell" service and to secure "repeat business". Using a unique data set of compensation...

This paper (forthcoming in Research in International Business and Finance) examines the practice of employing multiple compensation consultants. Examining data of a sample of UK companies over the period 2003–2006 we find that CEOs receive higher equity-based pay when firms employ more than...

We provide fresh evidence regarding the relation between compensation consultants and CEO pay. First, firms that employ consultants have higher-paid CEOs—this result is robust to firm fixed-effects and matching on economic and governance variables. Second, while this relation is partly due to...

We examine the influence of proxy advisors on firms’ shareholder engagement behavior. Our analyses exploit a quasi-natural experiment using Say-On-Pay voting outcomes near a threshold that triggers a review of engagement activities by Institutional Shareholder Services (ISS). Firms receiving...

While compensation consultants are known to play an important role in the design of executive compensation contracts, evidence on the effect of compensation consultants on CEO pay is mixed. Using a sample of 3,198 compensation consultant engagements and 576 executive compensation consulting fee...

This paper illustrates why some firms hire compensation consultants while others do not, and the implications for CEO compensation. We consider a matching model of firms and CEOs, in which firms are governed by effective boards that act on behalf of shareholders, non-conflicting consultants...

This paper provides new evidence on the effect of compensation consultants on CEO pay. We show that the use of a compensation consultant has an increasing effect on the level of total CEO compensation, which is consistent with the “ratcheting up” effect of consultants on CEO pay argued by...

This paper examines the SEC regulation requiring non-binding general shareholder vote on executive compensation–“say-on-pay” (SOP). We examine the first two years of SOP in the Russell 3000. The results confirm previous shareholder-proposal studies by finding that SOP approval (reject)...

We provide the first evidence of external labor market penalties when directors fail to align with shareholder preferences for monitoring executive compensation. When shareholders express disapproval through low Say-On-Pay (SOP) support, directors incur significant external penalties, including...