The Center hosted a webinar this week, “Hiring and Evaluating the Board’s Compensation Consultant,” to address one of the most common inquiries from Subscribers – best practices for an effective compensation consultant RFP process. The webinar featured Katy Barclay, Chair of the Talent and Compensation Committee for Kontoor Brands and Director at Five Below, and formerly CHRO of Kroger and General Motors; Michelle O’Hara, EVP and CHRO of SAIC; and Lauren Brown, Senior Vice President of Global Total Rewards for Hyatt.
Ms. Barclay highlighted that several circumstances necessitated soliciting RFPs, including a rapid shift into high growth, a spin-off transaction from a parent company, and concerns over engagement with the lead consultant. In each case, it was valuable to leverage networks to ask which consultants personal contacts had worked with and in which ones they had confidence.
The point on networking was reiterated by Ms. O’Hara. Additionally, she explained how SAIC’s use of a highly structured process allowed the RFP to run very smoothy, as everyone was “on the same page,” and expectations were well understood. While SAIC ultimately remained with its incumbent consultant, the company established a precedent for evaluating the relationship annually and establishing expectations going forward.
Ms. Brown indicated that Hyatt’s process produced a change in consultants. While there was a careful structure in place for the process, she highlighted that “gut instincts” following interviews with the full Compensation Committee, the Board Chair, and the CEO played a significant part in the ultimate decision.
The panelists agreed that ultimately the Compensation Committee Chair and the CEO choose the consultant, with the CHRO and others on the Board playing an important role. Further, fee structures tended to be similar (though there is a difference between the largest firms and boutique firms) and hence are not typically a primary consideration in the decision. All the panelists highlighted that the relationship with the executive compensation consultant is a personal one, and therefore, the choice of individual consultant is as important (if not more so) than the overall firm.
Thanks very much to our panelists and to all who participated in the call. The Center has developed several materials to assist with Subscribers’ evaluation and RFP process for compensation consultants. You can find our sample consultant evaluation checklist
here and our sample RFP
here.
