Comment by _delirium

I think shareholders might not widely realize how it works. Often, shareholders are actually the ones who demand bringing in outside consultants, because it's seen as getting an independent third opinion. It looks more self-interested for the company's executives to set their own pay, than it does for an executive-recruitment consulting firm to recommend what the going rate is. Of course, executives have gotten good at getting the right consulting firms to answer those questions, and consulting firms know that if they don't answer appropriately, they aren't going to be asked back.