Over the past year, news reports have pointed out executive pay abuses by a small, but widely recognized number of companies. Shareholders are justifiably outraged when compensation actions don’t match a company’s track record of performance. Combine this with the meltdown in the financial services industry and it is no surprise that calls for reform are in the air.

As the head of a firm that advises many boards on executive pay decisions, I understand the complexities of the process and agree that parts of the system need fixing. But I also know that enacting reactionary and overreaching reform will do more harm than good.

The Treasury Department, Securities and Exchange Commission, and Congress all have reform proposals on the table. Hewitt supports the overarching intent of these efforts: to improve transparency and accountability so that shareholders can better evaluate the appropriateness and fairness of a company’s executive pay practices. But this debate is high on emotion and short on facts. The growing and often ill-informed rhetoric could lead Congress or the SEC to take actions that ultimately deprive boards and their compensation committees of the very best and most qualified advisors at the time when they need those most.

Somewhat hidden amongst many worthy reforms, there is one particularly damaging measure that would require multiservice firms that routinely offer a range of services beyond compensation advice to reveal competitively sensitive information about all of the services they offer the company. This disclosure would imply conflicts of interest that don’t actually exist. In fact, every single reported academic study on the topic has refuted this claim. Nonetheless, the end result will be unavoidable: boards will move their work to smaller boutique consulting firms to get around the stigma of this disclosure, which will limit the choice of advisors available to boards and the depth of resources at their disposal.

We strongly support increased transparency, but it must be relevant to the situation and shouldn’t be achieved at the expense of boards’ ability to administer good governance. This proposed fee disclosure requirement would dramatically change the competitive landscape for pay consultants while doing nothing to solve the underlying problem: executive pay abuses. In fact, the SEC’s current proposal would reward some of the same boutique consulting firms that advised most of the financial services firms referenced in a recent Washington Post article highlighting executive compensation abuses. Independence will not be achieved simply by requiring, either directly or as a consequence of shareholder pressure, that board compensation committees strictly use boutique consulting firms. One might actually argue that the boutique firms are less independent simply because each client represents a much higher percentage of their annual revenues putting more at stake if there is a fundamental disagreement in approach between the consultant and the board.

That’s why Hewitt supports reforms that make sense. We stand behind four of the five changes proposed by the SEC. We’re supporting greater transparency about director qualifications, stock compensation valuation, how all elements of executive compensation are reported, and the makeup of company leadership. We also advocate for disclosure that matters. Boards should be required to explain to shareholders the protocols they use to ensure the objectivity of the advice received from their compensation consultants. Then fee disclosures would kick in only when the possibility of a conflict of interest reaches a predetermined threshold–similar to the system used by the New York Stock Exchange. These goals reflect the good governance principles that we have counseled our own clients to follow.

Instituting these reforms across the entire industry would be an enormous step towards ensuring objectivity of advice, increasing transparency for shareholders and strengthening board-level accountability. They would achieve the intended goal of reform–stamping out the select cases of abuse–without taking away the ability for boards to seek counsel from the best-equipped advisors at a time when they need them the most.

The boards at America’s public companies hold the fiduciary responsibility and are accountable to shareholders. Let’s give them the tools and resources they need to fulfill that obligation.

Russ Fradin is chairman of the board and CEO of Hewitt Associates, a human resources firm that specializes in consulting and benefits outsourcing.

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