A Match Made in London Adds Depth and Scale to Farient

March 12, 2024

A desire to expand its geographic reach while providing greater opportunities for staff led Robin A. Ferracone, the founder and CEO of Farient Advisors, to undertake a combination between Farient and Remuneration Associates (Rem.n), located in London. The deal, announced in a March 6 press release, will add Rem.n’s partners Simon Patterson and Stephen Cahill to Farient’s leadership team.

In the following conversation, the trio discuss the strategy and opportunities that result from the union of their two firms.


 

Robin Ferracone: The combination of our two firms is rooted in our strategy to continue to build an enduring, innovative, and global governance and executive compensation firm. We wanted to augment our core strengths in terms of our strategic and analytic capabilities, and our proactive high-touch, high-quality service model. Our combination with Rem.n allows us to continue to build on our core strengths, while also achieving even better economies of scale. This combination is about synergies, too. We have a broader mix of clients and analytic platforms to offer our people. We have broader resources and geographic reach to offer our clients. Globalization is important. We’re a founding partner of the Global Governance and Executive Compensation (GECN) Group that serves clients seamlessly around the world. Having a Farient office in London strengthens that. One area that Simon and I are working on with a joint client is how to harmonize their compensation programs around the world. We are uniquely positioned to do that for our clients. All things considered, the combination creates a better firm for clients and greater opportunities for our people.

Simon Patterson: Let me build on that. We have a very similar DNA in terms of work ethic, knowledge of incentive compensation design, data usage, and how one runs the operations of a consultancy. The reason why both Robin and I remain in executive compensation work is because it’s incredibly exciting. We find ourselves in the most interesting, fascinating places within companies tackling strategic problems because we’re dealing with executive pay. That basic interest in business combined with the fact that many of our clients are in a vastly changing world makes the topic of incentive pay—that is, “What are we paying executives to achieve?”—both immediate and captivating. We have clients that are, quite literally, struggling with questions around sustainability and climate change. Those are significant issues and how we direct our investment in management talent towards achieving sustainability goals is an enormous challenge.

Stephen Cahill: To Robin’s point, our go-to market differentiator is transatlantic consulting expertise. From that perspective, having people who are smart on both sides of the Atlantic and able to consult on difficult executive comp issues are competitive advantages. There is a growing consensus that the U.K. has lost its status as the number one capital market in the world for a variety of reasons. How executives are paid plays a role in that to some degree. The U.K. has recognized this discrepancy as an issue—can we capture the good parts of U.S. pay while also making sure that we develop or bring to the U.K. the performance that U.S. firms have delivered. To be competitive, U.K. companies need to attract the best talent to deliver better returns where higher executive pay would be warranted.

Robin: From a governance standpoint, there’s also an opportunity for the U.S. to learn from the U.K. For the last several years, through our GECN Group partnership, we have undertaken an annual research project to study how our different markets incorporate stakeholder measures into their compensation plans. Europe and the U.K. tend to be ahead of the U.S. and leading on these issues. Farient’s ability to dig deeper and more broadly into trends provides valuable insights for boards.

Simon:  That’s another area where we share our ideas and approach—innovation in data analysis. Farient has always been a data centric company while our firm developed and launched the “CEO Value Index” in the U.K. some years ago. The Index is a simple mechanism to show shareholders the value received for every pound or dollar paid to a CEO in realizable remuneration for actual salary, actual bonus, and actual long-term incentives. We have an opportunity to expand that kind of data analysis to assess pay for performance by country or stock exchange.

Robin: Highly paid doesn’t necessarily mean overpaid. That was a chapter in my book, Fair Pay, Fair Play: Aligning Executive Performance and Pay. Designing pay programs that motivate behavior to impact performance and then communicating the results to shareholders is just as imperative today. While there are significant differences between U.S. and the U.K. pay practices, these differences invite us to explore more deeply why they exist.

Stephen: While there are differences, interestingly, a lot of governance practices originate in the U.K. and are adopted in the U.S. Say on Pay, for example, started here and has been adopted in the U.S. Such rapid adoption across borders, even continents, has been supported by global investment managers like BlackRock and Vanguard. Such firms learn from practices in their different markets and want to see best practices applied on a global basis. Unfortunately, in the view of some, the U.K. governance regime has become too restrictive and inhibits innovation and growth. Many of the rules were adopted for good reason but when taken in totality are no longer fit for purpose.

Robin: When you step back from local governance and ask yourself: What are we trying to do here? We’re all trying to do the same thing. We’re trying to motivate executives to create value for their owners over the long term. At the same time, the velocity of CEO transitioning has gotten faster in recent years. Do we need to do more in compensation to facilitate that transitioning? These are the kinds of questions on both sides of the pond, which I think are healthy, and further motivated the combination of our two firms.

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