New Executive Compensation Research: Peer Group Benchmarking Inherently Flawed And Inflationary

An over-reliance on peer group compensation benchmarking is central to the persistent issue of rising executive pay in the United States, new research finds. While other research examines flawed peer group methodology, this new study makes it clear that peer grouping with minimal board discretion is a seriously flawed methodology even when the peer groups are fairly constructed. The study also is the first to document that peer group benchmarking – now so widely utilized that it is enshrined in federal regulations – has accidentally become the de facto standard even though it never was designed to determine CEO compensation.