What are the remuneration consultants?
Reward consultants are third -party experts who provide advice to corporations about compensatory packages for employees, managers and director. Usually remuneration consultants are left if impartial advice is required to ensure that compensation decisions do not exceed normal industry standards. In particular, the executives and members of the Board of Directors have set their own compensation without any supervision authority that the decision can veto the decisions. Leaving the independent legal representative shows the shareholders and regulators that the reward packages were adequate and were not intended to introduce the company in favor of a small group of individuals.
Compensation packages that top -level managers and members of the Board of Directors in large multinational corporations receive astronomical for average people. The compensation package may include wages, stock options and incentives. It may also include substantial deferred payments, severance pay and special pensiondoses. Compensation packages are contractual and most benefits are guaranteed. Once the contract is signed, the executive will receive most of the benefits of the contract, regardless of the quality of its performance.
As a result, remuneration consultants are an important means of control and balance. The highest Executive Executive Director, who is released from his position for poor performance, can receive millions of dollars under the contract. Without the independent verification that the compensatory package was reasonable, it may seem as if the outgoing executive received an unjust unexpected unexpected. Such an impression can be alarmed by shareholders, undermine the public confidence and serve as a red flag for regulatory bodies.
The best executives of the company or the company's board of directors hire remuneration consultants if it is necessary to make a decision on compensation. The consulting company is armed with information about the comparison KORSaying and compensatory structures that are standard in the field. They will check the compensatory package that the company would like to grant and assess the value of the executive or director, taking into account its unique attributes. The consulting company then prepares a written recommendation regarding the overall value of the compensation package and its components.
Governments in some countries focused on the role of remuneration consultants to improve the administration and management of companies. In the UK, for example, a bill to improve the liability of consultants for remuneration was introduced into Parliament in 2011. The bill required the remuneration advisors to confirm the independent nature of their advisor. The highest levels and managers of the highest level were required that the non -consumer directors approve the selection of the consulting company and receive a copy of the consultant's recommendations. The bill has been designed to make regulatory bodies in many countries to make - create responsibility and transparency in the Renu processMERACE most compensated staff of corporation.