“Are any FTSE companies obtaining advice for their Remuneration Committees (e.g. matters for discussion by/on the agenda for the Remuneration Committee, guidance as to market and investor expectations and developments in relation to matters in the remit of the committee) externally and if so, are they obtaining this advice from accountancy firms (the Big 4) or law firms? Any pros and cons of obtaining advice from one or the other
We use HNBS on an ongoing basis to advise the RemCo both on benchmarking and market trends and also to give an objective view on any proposals put forward by management. Our preference has been to use industry specialists rather than accountancy or law firms although I understand Deloitte has a good reputation in this area.
We use Hewitt New Bridge Street for this sort of advice. They pull together the results of a number of different salary surveys for us. This gives us a good set of benchmarks when setting remuneration packages. HNBS also give us guidance on latest market trends and general developments in the corporate governance aspects of remuneration policy. If requested HNBS will give a presentation to the Remco once a year to set the scene for the remuneration levels discussion. We do get some information from Deloitte, but this is generally their freely available data.
In the past we have used free data from New Bridge and Deloitte’s. This year we paid for more detailed sector data from Towers Watson. The important point is to ensure the RemCo clearly understand the information you have given to them and to use the data properly in order to make the right recommendations at the appropriate time.
We currently take advice from PwC, bienially on external remuneration benchmarking (through PWC’s ownership of Monk’s), and on “hot topics” from time to time eg pensions cap impact. In previous lives I have used both Deloitte and Hewitt New Bridge Street. I have never used a law firm for remco advice, save for contract drafting or LTIP rules.
I have found Hewitt New Bridge Street to be very reliable suppliers of advice and information to all Rem Comms I have worked with. They have a good idea of investor expectations and I have found them most helpful when dealing with Voting agencies. I have used other remuneration consultants and they too provided excellent advice to the committee.
There are a whole range of specialist remuneration advisers out there who might be better placed than either accountancy or law firms. For example New Bridge Street, Towers Watson, mm&k. Lots of other firms also have remuneration/reward practices eg Mercer, Aon
if you do wish to look at law firms, try one with a big remuneration practice eg Linklaters and Herbert Smith.
We usually rely on freely available published information from a variety of sources. Of these, publications from Deloittes are well regarded and appear to be fairly representative of the market generally. Last year we took advice from Hay on the remco’s proposals, however they merely confirmed the view that had already been formed. We also take into account the views expressed by our shareholders at the various meetings held with them throughout the year.
Although I do not know the details we have taken advice from PwC on many aspects of our remuneration committee, including set up, reporting and remuneration policy
Our experience is that the quality of advice very much depends on the individual although the degeree to which each ‘house’ is close to market sentiment, can vary. We have moved away from a legally-orientated practice to PWC who appeared in the beauty parade to be the most creative. Deloitte’s remuneration practice is very highly regarded but we are prevented from using them because they are our auditors.