LINCOLNSHIRE, Ill., Feb 01, 2010 (BUSINESS WIRE) --
Hewitt Associates, a global humanresources consulting and outsourcing services company, today announced it has closed on a partial divestiture of its Executive Compensation Consulting business in North America. 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. Terms of the transaction were not disclosed.
"The independence of executive compensation consultants who serve Compensation Committees has become a politically charged issue over the past few years," said Russ Fradin, Hewitt's chairman and chief executive officer. "While Hewitt has established substantial safeguards to ensure that our consultants provide purely objective advice and counsel, the recent SEC fee disclosure rules and political environment are pressuring some clients to avoid the issue entirely by moving to completely independent advisors.
"This spin-off keeps those clients' best interests in mind--they can continue to work with their current executivecompensation advisor and team, without compromising the appearance of independence," continued Fradin. "At the same time, it 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 comprehensive 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 robust executive compensation advisory business for management. Given the increased scrutiny and complexity of executive pay practices, Hewitt believes that more companies will want to hire a management advisor who works independently of the board consultant. All of Hewitt's clients will continue to have access to its experienced consultants, the strongest worldwide executive compensation database in the industry, technical resources, and global perspectives to help them make informed decisions around executive pay.
"In today's volatile environment, companies need expert counsel to help them address complex and highly sensitive corporate governance and executive pay issues," said Eric Fiedler, president of Hewitt's globalConsulting business. "Our executive compensation practice remains an important part of Hewitt's global Consulting business. This partial spin-off simply allows us to address the changing landscape in North America while continuing to pursue our growth plans worldwide."
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. Hewitt and Meridian are working closely together to ensure that all of their executive compensation clients experience minimal disruption during the transitions.
"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 Michael Powers. "We formed Meridian Compensation Partners to help these valued clients meet these new governance standards, while maintaining their trusted relationship with their current advisor."
"Meridian Compensation Partners will be a fully independent executive compensation consulting boutique comprised of consultants who are among the most experienced in the industry and who have the depth of resources to serve the complex needs of today's Compensation Committees," added Jim Wolf. "We look forward to helping existing and future board clients apply sound corporate governance practices and implement performance-based executive compensation programs that are in the best interests of the company and shareholders."
About Hewitt Associates
Hewitt Associates (NYSE: HEW | Quote | Chart | News | PowerRating) provides leading organizations around the world with expert human resources consulting and outsourcing solutions to help them anticipate and solve their most complex benefits, talent, and related financial challenges. Hewitt works with companies to design, implement, communicate, and administer a wide range of human resources, retirement, investment management, health care, compensation, and talent management strategies. With a history of exceptional client service since 1940, Hewitt has offices in more than 30 countries and employs approximately 23,000 associates who are helping make the world a better place to work. For more information, please visit www.hewitt.com.
About Meridian Compensation Partners LLC
Meridian Compensation Partners provides trusted counsel to boards and management at hundreds of large North American companies. We consult on all executive and corporate governance compensation, including pay for performance designs, disclosure, competitiveness, and alignment with shareholder value. Founded in 2010 as a spin-off from Hewitt Associates, our consultants have decades of experience in pay solutions that are responsive to shareholders, reflect good governance and are directly linked to our clients' business strategies. Our partners have on average more than 20 years experience in the field, bringing unparalleled depth of resources, content expertise and boardroom experience to our client organizations.
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