Number: RS22604
Title: Excessive CEO Pay: Background and Policy Approaches
Authors: Gary Shorter and Mark Jickling, Government and Finance Division; Alison A. Raab, Knowledge Services Group 
Abstract: Supporters of current CEO pay levels argue that executive compensation is determined by normal private market bargaining, that rising pay reflects competition for a limited number of qualified candidates, and that even the richest pay packages are a bargain compared with the billions in shareholder wealth that successful CEOs create. Others, however, view executive pay as excessive. Some see a social equity problem, taking CEO pay as symptomatic of a troublesome rise in income and wealth inequality. Others see excessive pay as a form of shareholder abuse made possible by weak corporate governance structures and a lack of clear, comprehensive disclosure of the various components of executive compensation. This report describes the major legislative and regulatory proposals that have sought to remedy these perceived problems, including H.R. 1257 (Representative Frank), which the House passed on April 19, 2007, and would require that CEO pay packages be put to a nonbinding shareholder vote. S. 1181 (Senator Obama), a companion bill, was subsequently introduced in the Senate.
Pages: 6
Date: November 29, 2007