Why are US executives overpaid?

Source : AFL-CIO (2008

In 2008 , the CEOs of the Fortune 500 US companies pocketed an average of 15 .2 million in pocketed over 100 million (Pizzigati , 2007 . Institutional investors and activists have tried to introduce resolutions like the Say on Pay ' proposals or shareholder advisory vote on executive compensation packages to discontinue this kind of practice

Prior to the much publicized issue on executive compensation packages the US corporate governance arrangements and the US Securities and Exchange Commission (SEC ) have failed to give shareholders mechanisms to share their views and influence executive

compensation packages . Public companies in the United Kingdom have been allowing shareholders to vote on the remuneration report which reveals executive compensation packages . The results of the vote are not binding but this empowers the shareholders to give their opinion that could influence executive compensation packages

The top 10 recipients of TARP have collectively paid a compensation of 242 million to their CEOs (AFL-CIO , 2009 . These companies would have d Chapter 11 bankruptcy if not for the tax payer 's money . The illustration below shows the CEO Pay at the Top 10 TARP Bailout Recipients

Source : AFL-CIO (2009

Findings /Data Analysis

It is found that the US government tried to limit executive pay particularly to the TARP-recipient companies . The American Recovery and Reinvestment Act of 2009 restricts them to giving executive bonuses to one-third of shareholder advisory vote their executive compensation plans . Thus , this leads o greater accountability on the part of the companies , thereby giving shareholders more information on executive compensation packages Over the years , some major shareholder advisory companies in the US have tried to challenge management on executive compensation packages . In 2006 , they have advised large shareholders of Yahoo to withheld votes from the three board members who served on the executive pay committee The...