8 Questions to Ask When Hiring Compensation Consultants

Hiring a compensation consultant for CEO pay is an important decision. You need to do your homework when deciding who to hire. Particularly when the topic is “how much are we going to pay the Big Boss?” When undertaking this task, you’re working with members from the board of directors – specifically the board’s compensation committee – who have the ultimate decision-making authority about which consultant to hire.

Often, someone on the compensation committee – or perhaps the CEO and/or the board chair – will express a preference about who they want to hire – or at least interview – to serve as the committee’s compensation consultant. It’s common for a referral to be made by a director who currently – or formerly – worked with that specific consultant in their capacity as a director on another board. This happens because so many directors serve on more than one board at a time. It’s an insular fellowship.

Before making that hiring decision, there are 8 questions you should be asking:

• Who is doing the hiring?
• Who is helping with the hiring?
• Do they have time to advise you?
• Do they have the expertise you seek?
• Are they willing to ask probing questions?
• What comp changes would they recommend?
• How deep are their resources & services?
• How much do we pay the consultants?

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