Analyst Objectivity: Managing the Research Process:

Analyst Compensation

 

 

Analyst Compensation

Position: Compensation of investment analysts should be aligned with the quality of the research, the long-term performance of the analyst’s recommendations, and with overall firm profitability.

Rationale: Structuring compensation in this manner will help avoid undue influence from other factors not related to the quality of the research. It is unacceptable to base analyst pay on contributions to specific investment banking deals, or have analyst pay determined by managers involved with investment banking, equity sales, corporate finance, or trading, and firms that use such practices should disclose that fact to their clients.

Where stated: Letter to SEC on Regulation Analyst Certification 30 September 2002; Letter to FSA on CP171 "Conflicts of Interest: Investment Research and Issues of Securities" 3 June 2003