Legislation

Skyrocketing executive pay packages are about to become more costly

For years, lawmakers and regulators have struggled with how to rein in the multimillion-dollar pay packages earned by corporate America’s top executives. Despite legislation signed in the 1990s attempting to cap C-suite pay, average salaries have more that doubled over the last 20 years.

One provision in the massive tax overhaul passed by Congress late last year attempts to place new curbs on pay. Under the measure, companies that dole out millions in performance bonuses to top executives could face a heftier tax bill.

Already, Netflix has responded by raising the salary of three of its top executives and dumping a short-lived program that tied their pay to company performance. Corporate boards across the country are considering whether to do the same, executive compensation experts say.

How companies, particularly Wall Street, pay their top executives has been thorny issue for years. Then-President Bill Clinton campaigned against excessive CEO pay and pushed a measure to cap at $1 million the amount that corporations could deduct from their tax bill for top executives’ compensation. But the law also included a compromise: Companies could still deduct pay over $1 million if it was “performance-based.”


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