The Power of Trust and Legacy: A Conversation with FW Cook CEO Dan Ryterband

Dan Ryterband is the CEO of FW Cook, an executive compensation consulting firm founded in 1972 by Ryterband’s former boss and close mentor, Fred Cook. The company was not only an early pioneer in this niche, but it is also the industry leader with the largest market share; FW Cook counts a full fifth of the S&P 500 FW Cook among their clients. 

“What does an executive compensation consultant do?” is a question on the minds of so many students. Ryterband explains that consultants operate as an advisory group whose service is to provide company leadership with the insights they need to make compensation decisions that will retain talent, motivate excellent performance, and strengthen the company as a whole.

Ryterband has been with FW Cook for nearly three decades. When he joined as a 30-year-old, he found a strong mentor in the company’s founder, Fred Cook, with whom he developed a deep professional and personal relationship. Ryterband attributes much of his loyalty to the company to his loyalty to Mr. Cook. He described how Mr. Cook asked him to lead and grow the business after his departure, and lead long enough to set up a fourth generation of leadership, feats which Ryterband has since accomplished in his time as CEO. 

Ryterband acknowledges the ways in which the management consulting industry has changed during his career. He describes how, over time, executive compensation decision-making has been elevated from management teams to boards of directors. This means that instead of being called upon on an ad-hoc basis, consultants are being brought in regularly for annual evaluations of compensation packages. This shift provides more consistent business and allows it to develop longer-lasting and more trusting relationships with its clients. 

The second major change is the proliferation of competition. Ryterband explains that FW Cook was in the right place at the right time and quickly took over the executive compensation market. Since then, however, the service’s profitability has attracted formidable competitors who are constantly improving. 

FW Cook advises 19% of the S&P 500, but just a decade ago, that share was 25%. With increased competition, Ryterband stresses the importance of avoiding complacency, and the company continues to improve its quality and range of skills, products, and services to maintain a competitive edge. 

Ryterband raises an extreme example to consider: Elon Musk’s unprecedented $56 billion bonus package from Tesla. Ryterband asked students to wrestle with the rationale behind this package–whether the staggering sum was excessive, as a Delaware judge ruled, or whether it was justified by the company’s desire to retain Musk, reward his achievement of pre-determined benchmarks, and motivate his performance in the future. 

The case study highlighted the myriad of considerations that factor into compensation and showed just how tricky those decisions can get. It also exemplified a conspicuous trend in recent decades, namely the dramatic increase in executive compensation. 

In the past 40 years, compensation for CEO’s has increased by 1000% inflation-adjusted. Ryterband explains that it’s simply a product of that paramount economic law: supply and demand. Exceptional talent is scarce, and the market for it is always expanding. Executive leadership, Ryterband says, is not like a TV, where paying less buys you slightly lower resolution; the difference between a good CEO and a great one is the difference between failure and success for a company. Still, a pertinent factor in compensation deliberations is how to avoid improper bias, particularly in a company like Tesla, where Musk’s brother and friends sit on the Board of Directors. 

One criticism of traditional management consulting companies is that they are sometimes hired to legitimize a position taken by an individual or a party within leadership discussions. When asked how FW Cook maintains its role as an independent facilitator in deliberations rather than a mercenary for management, directors, or executives, Ryterband says it all comes down to trust. 

FW Cook’s brand not only relies on the quality of their insights, but on a reputation for integrity, independence, and transparency rooted in their track record. Without earning trust, clients will stop seeking their advice. In Ryterband’s telling, that’s not only an imperative for FW Cook, it’s an imperative for any young person who wants to embark on a business career.