The incentives of compensation consultants and CEO pay

Brian Cadman, Mary Ellen Carter, Stephen Hillegeist

Research output: Contribution to journalArticlepeer-review

85 Scopus citations


We examine whether compensation consultants' potential cross-selling incentives explain more lucrative CEO pay packages using 755 firms from the S&P 1500 for 2006. Critics allege that these incentives lead consultants to bias their advice to secure greater revenues from their clients [Waxman, H., 2007. Executive pay: conflicts of interest among compensation consultants. United States House of Representatives Committee on Oversight and Government Reform Majority Staff, December]. Among firms that retain consultants, we are unable to find widespread evidence of higher levels of pay or lower pay-performance sensitivities for clients of consultants with potentially greater conflicts of interest. Overall, we do not find evidence suggesting that potential conflicts of interest between the firm and its consultant are a primary driver of excessive CEO pay.

Original languageEnglish (US)
Pages (from-to)263-280
Number of pages18
JournalJournal of Accounting and Economics
Issue number3
StatePublished - Apr 2010
Externally publishedYes


  • Compensation consultants
  • Corporate advisors
  • Executive compensation

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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