Excessive CEO Pay: Background and Policy Approaches
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Shorter, Gary; Jickling, Mark; Raab, Alison A.
[Excerpt] During the past several decades, average pay for non-management workers has stagnated, after adjustment for inflation, falling slightly since the early 1970s. In contrast, compensation of top corporate executives has risen dramatically. 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, cite instances in which executive pay appears to be excessive. Some see a social equity problem in which CEO pay is seen to embody 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. It will be updated as events warrant.
pay; worker; non-management; CEO; compensation; corporate executive; social equity; income; wealth; inequality
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