Promoting Highest Professional Standards in UK Remuneration Committee Advisory Services

This thesis concerns a specific aspect of executive remuneration; namely, the 'professional standards' of UK executive remuneration consultants (ExecRemConsultants) and companies’ in- house executive remuneration specialists (CoyExecRemSpecialists), in providing remuneration committee advisory services (RemCoAdvisory Services). It builds on the author’s previous research that had identified and made recommendations regarding the ‘Big Six Issues’ (BSI) in executive remuneration - such as ‘short-termism’, incentive plan design and corporate behaviours/ethics. In line with such previous research however, the hypothesis adopted for this thesis is that further regulatory changes regarding the issue of the ‘professional standards’ of those concerned is currently unwarranted – with such hypothesis being tested in this thesis via an empirical qualitative programme of semi-structured ‘elite interviews’ comprehensively covering the issue of 'professional standards'. These interviews involved a selection of key participants in UK executive remuneration policy and practice. The objective was to complement existing qualitative academic research on ExecRemConsultants/CoyExecRemSpecialists - in the line of Bender, Adamson et al, Bender & Franco-Santos and de Gannes, who did not focus extensively on 'professional standards' - and also to formulate conclusions that could be used to the benefit of UK practice. The Research Interview Programme (RIP) was conducted with 53 ExecRemConsultants, CoyExecRemSpecialists, RemCo chairs/members and representatives of Relevant Other Organisations - such as, regulators, proxy advisors and institutional shareholder representative bodies. These interviews were carried out between September and December 2016. The RIP included a Research Interview Consultants Background Questionnaire, together with a Research Interview Topics Guide and Supplementary Topics. The RITG covered the working relationship between RemCos and ExecRemConsultants, 'independence', 'conflicts of interest' (COI), the respective roles of the Big Four Chartered Accountants, Actuarial & Benefits Consultancies and Boutiques (the latter being consulting firms focused mainly or exclusively on providing RemCoAdvisory Services), the UK self-regulatory regime for ExecRemConsultancy and the ongoing operation of the Remuneration Consultants Group (RCG), with particular reference to the 'professional standards' of ExecRemConsultants - including the possibility of introducing a specialised RemCo advisory accreditation/qualification and/or a ‘licence to practise’ regime, CoyExecRemSpecialists' working relationship with RemCos and ExecRemConsultants, RemCo advisory documentation circulation protocols and managing CoyExecRemSpecialists’ COI. The RITGST focused on the Government's 2016-17 corporate governance inquiry and subsequent proposals, such as pay ratio disclosure and worker representation on the Board. Also included was the respective potential for (i) an annual binding shareholder vote, (ii) a shareholder vote on the appointment/retention of ExecRemConsultants and/or (iii) the disclosure to shareholders of fees charged by professional services firms for the provision of 'Other Services' (eg., taxation and accountancy) as well as RemCoAdvisory Services. The results of the RIP and the other research findings of this thesis provide very significant support for the adopted hypothesis. However, certain proposals for change are made in this thesis for RCG’s consideration in respect of the ambit of its activities and the scope of its Voluntary Code of Conduct. This thesis is ordered as: Chapter 1 Introduction, Chapter 2 Context: UK Executive Remuneration Scene and Literature Review, Chapter 3 Research Methods, Chapter 4 Findings, Chapter 5 Discussion and Chapter 6 Conclusions – followed by the Appendices and the Bibliography. It covers the state of research, policy and practice as of 31 July 2018.