Under the agreement, a select number of Hewitt principals
and consultants will be leaving Hewitt to form Meridian Compensation Partners
LLC, which will operate as an independent executive compensation consulting
firm. Russ Fradin, Hewitt’s chairman and chief executive officer, said in the
announcement that the arrangement "creates opportunities for us to expand
our relationships with those clients that may have felt restricted from
engaging Hewitt for broader consulting and outsourcing work because we were the
executive compensation consultant to their board."
Hewitt will continue to serve board clients that are
comfortable with the controls already put in place to ensure the independence
of its executive compensation advice or where fee disclosures are not a
material issue. It will also focus on growing its executive compensation
advisory business for management, according to the announcement.
Meridian Compensation Partners LLC will operate under the
leadership of Managing Partners Michael Powers and Jim Wolf, who have been
Executive Compensation practice leaders at Hewitt. Based on their client
alignments, a select number of Hewitt principals and consultants will be moving
to Meridian in two phases between February 2010 and October 2010.
"Pressure from regulators and institutional
shareholders is forcing some of our clients to adopt exclusivity guidelines
that essentially require boards of directors to work with executive
compensation consulting firms that provide no other services to that
company," said Powers, in the announcement. "We formed Meridian
Compensation Partners to help these valued clients meet these new governance
standards, while maintaining their trusted relationship with their current adviser."