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CEO Compensation consultants

PI: Professor Raghavendra   Rau (CJBS); Jenny Chu (CJBS)

Project Title: CEO   Compensation consultants

Project Summary: There is currently a great deal of research on why CEOs are paid so much. A number of papers have argued that this is because of the ratchet effect – in that CEOs are paid highly because the firm chooses appropriate peer groups where the benchmark CEOs all get high salaries. Another argument is that this is because CEOs employ compensation   consultants whose incentive is to make sure that their clients get higher   salaries. Since 2006, firms have been required to disclose CEO peer groups   and the identity of the consultant. While a few papers have looked at how the choice of the peer group affects pay, very few papers have examined the choice of compensation consultant.

Project Period: 1.9.2013-31.8.2014

Publication - The Economist

Publication - The New York Times

End of Award Report - July 2014

Project Update - March 2014