Why Use A Compensation Consultant
Independent Recommendations & Advice
Engaged by a board of directors and working with management to maximize shareholder wealth, L&A provides independent executive compensation recommendations without bias. L&A does not have additional services to sell to the Company, so we also are not conflicted by selfish interests other than to develop recommendations that are in the best interest of management and the board to equip companies with the best tools possible to attract, retain and motivate top talent.
With the increasing pressures of the SEC, IRS and institutional shareholder groups on executive compensation, an independent consultant can provide real value to the process and governance of executive compensation. The SEC has indicated it plans to double the number of proxy audits specifically targeting executive compensation.
Keep Your Board of Directors in Place
Institutional Shareholder Services (ISS) is increasingly recommending votes against board of directors and compensation committee members for executive compensation reasons. L&A can help a company navigate the difficulties of this 800 lb. gorilla that has a one sided view of the world.
L&A works with over 150 public and private companies. As such, we are on the leading edge of what works best to attract, retain and motivate key talent.
Working Through Difficult Issues
Oftentimes, companies need the flexibility to do the right thing with compensation when it optically doesn’t seem right. For example, a company in bankruptcy/turnaround may need to provide retention payments to key employees for fear of losing the most important asset in a turnaround – their people. However, to the general public, retention payments in bankruptcy look like “pay for failure”. An independent consultant can provide the board and management the coverage for making these payments. There are numerous other difficult issues that L&A has worked through with companies to provide the board and management the necessary umbrella coverage and right answers.
As the litigation support experts against Enron’s egregious bonus payouts, L&A understands where compensation landmines exist. Studies have linked many controversial pay practices, such as option backdating, to the absence of independent consultants and absence of independent directors of the board.
Say on Pay Legislation
The passage of Say-on-Pay has resulted in the increased scrutiny of executive compensation programs by the SEC and shareholder activist groups such as RiskMetrics/ISS. As such, independent executive compensation consulting will be at a premium to ensure executive compensation passes shareholder votes.
Most organizations don’t have the expertise to develop best practice executive compensation programs. Executive compensation is what we are.
Many organizations don’t have time to spend on executive compensation planning and design. At L&A, it’s our full time job.
We listen and assess your needs in order to customize a plan for you. Just because somebody else does it, doesn’t equate to “it’s right for you”.
Alignment With Shareholders
L&A aids committees in setting pay in a manner that aligns more closely with the interest of shareholders.