Hewitt spins off executive comp business

Posted by Marc Hodak on February 2, 2010 under Executive compensation, Self-promotion | Be the First to Comment

Bulletin: If you are a public corporation, and you are still using Towers or Mercer as your comp consultant, you are now officially screwed.  You are exposing yourself to all manner of legitimate shareholder concerns, and all the attendant publicity.

That is the real message behind Hewitt’s announcement to spin off its executive compensation practice from the rest of its HR consulting business.  Hewitt has decided that they don’t want to deal with explaining to increasingly defensive boards how getting $100,000 for advising them on senior management pay is not a conflict with their selling that management $10 million worth of other HR services.

This was probably an easier decision for Hewitt than it would be for Towers or Mercer since Hewitt was not a particularly big player in the executive comp area.  All the same, the biggest “in” you can have with a company to whom you are selling your services is a relationship with top management, which executive comp consulting certainly gives you.  It’s a difficult relationship to spin off.  Hewitt must have determined that, at this point, that relationship was more problematic than it was helpful.

You know Hewitt didn’t make this split out of a lofty concern for governance principles.  This is being driven by an emerging consciousness among boards that this is a conflict that no “Chinese walls” can overcome.  Boards need excellent, independent compensation advice.