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.”