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Now more than ever there is a big, bright spotlight on Executive Compensation. It is not just your executive team looking at these plans anymore. It is the SEC, your shareholders, employees, customers and even the press. Finding the right consulting firm (whether it is a large global organization or a small boutique firm) that has the perfect balance of technical knowledge, creativity and chemistry is challenging. When selecting an Executive Compensation consultant, it is important to focus on eight key factors.

Technical Knowledge
The consultant should be knowledgeable of all relevant tax, accounting and legal implications of Executive Compensation programs. This is not to say they should be relied upon for legal, tax or accounting advice as most are not lawyers or CPA’s, however, their recommendations should incorporate practices that will be best for your company in these focus areas.

Knowledge of Your Business and the Industry
It is important for the consultant to demonstrate knowledge of your business as well as that of the industry in which your organization competes and your competitors. This is not to say that the consultant needs to have worked in your industry before, but if not, s/he should demonstrate knowledge of industry specific jobs, company financials and how your firm makes money, your labor market, and competitors.

Consultant should meet independence standards set forth by the stock exchanges. They key to this is that the consultant should not do work for both the Board of Directors (Board) and management team and report directly to the Board. Please note, the firm may work in the benefits or pension arena for a company and still be considered independent if it can be shown that this work will have no impact on the consultant’s recommendations. For example, if the consultant’s services are being provide by a completely separate and distinct arm of the firm.

Ability to Consider Competing Needs
Balancing the needs of the shareholders and their representatives, the Board, shareholder advocates such as Institutional Shareholder Services (ISS) and Glass Lewis, and your company’s executives is tricky. The right consultant will be able to develop programs that balance these often-competing needs or s/he will have the ability to convince other stakeholders why certain needs are paramount as at the end of the day, your company has a business to run and shareholder returns to deliver.

The consultant should be creative and not afraid to recommend and implement cutting-edge solutions if they will help deliver the best results. You are not paying them to re-purpose the same old comp plans that companies have been implementing for the last 20 years. A creative plan will set your organization apart from your competition and help you attract and retain the best talent. Ask them to tell you about their most creative plan design.

Willing to Make Tough Decisions and Say No
The consultant should have a strong point-of-view and be willing to stand up for that point-of-view, even if it means telling management or the Board "no". This is particularly true with respect to peer group selections, long-term incentive (LTI) plan designs, and selection of key metrics.

Consultant Chemistry with the Board and Key Executives
The consultant should have strong chemistry with your Board and key executives and be seen as a “partner” in the process. Interviewing prospective consultants rather than just relying on a Request for Proposal (RFP) responses will be time well spent for you, your Board and your key executives.

Access to Data and Global Capabilities
The consultant and his firm should have strong access to survey data (multiple survey sources in addition to proxy data for public companies) as well as global capabilities (data and market knowledge) as most firms are global in nature in this day and age.

Now that you know what to look for, where do you start? HR Company Store of course! You can search for both boutique and large Executive Compensation firms based on the size of your organization and the states you have employees. You can read reviews and see how other HR professionals rate the different organizations.