Number: RL33935
Title: The Economics of Corporate Executive Pay
Authors: Gary Shorter and Marc Labonte, Government and Finance Division 
Abstract: In the 110th Congress, Representative Frank has introduced the Shareholder Vote on Executive Compensation Act (H.R. 1257), which was approved by the House on April 19, 2007. Soon afterwards, Senator Obama introduced an identically named companion bill, S. 1181. The bills would require publicly held companies to hold annual non-binding shareholder votes on their executive compensation plans and any new "golden parachute" compensation offered to executives during mergers and acquisitions. Critics argue that excessive executive pay can be significantly traced to the fact that the members of corporate boards are not sufficiently independent of managerial influence. In this view, boards formulate executive pay packages that often allow executives to extract hefty compensation deals that bear little relationship to their contribution to the firms.
Pages: 38
Date: December 21, 2007