I think this is the sort of issue for which the phrase 'no sh*t Sherlock' was invented. According to a report for the US House of Representatives Committee on Oversight and Governance Reform, the remuneration consultants that advise companies on executive pay are highly conflicted. This is a complicated issue, but I think a nuanced and tentative interpretation might be... if you are paid a lot of money by a company, you are unlikely to tell the directors they are paid too much, let alone find ways to reduce their remuneration.
I'm being a little bit simplistic (no really) but the report does set out some pretty stark messages. Namely that remuneration consultants are hideously conflicted because they typically do other work for the same companies that has far more value (therefore are they going to upset the applecart on remuneration issues when this means it could jeapordise other, more valuable, consulting work). Particularly interesting is the suggestion that the greater the conflict, the less pay restraint at the company concerned -
There appears to be a correlation between the extent of a consultant’s conflict of interest and the level of CEO pay. In 2006, the median CEO salary of the Fortune 250 companies that hired compensation consultants with the largest conflicts of interest was 67% higher than the median CEO salary of the companies that did not use conflicted consultants. Over the period between 2002 and 2006, the Fortune 250 companies that hired compensation consultants with the largest conflicts increased CEO pay over twice as fast as the companies that did not use conflicted consultants.
I'll chuck in my obligatory warning about muddling up correlation and causality, but surely this one deserves further scrutiny? Something similar in the UK would be a good start.