Risk & Compliance

Will the Government Legislate Executive Pay?

If business leaders don't wake up, says the PCAOB chairman, ''I predict that there will be legislation.''
Stephen TaubMarch 1, 2004

The chairman of the Public Company Accounting Oversight Board warned that the U.S. government could intervene to control executive compensation if company managers do not, according to Reuters.

“If the anger of the American people continues and business leaders do not wake up soon, I predict that there will be legislation,” William McDonough reportedly told a gathering last week at the Economic Club of Chicago.

McDonough said a company’s compensation committee should review the appropriate level of CEO pay — and added that it would be “good riddance” if a chief executive quit because his or her pay was being cut.

“I would turn to the directors and point out that there are lots of fine people in America, many of them in this room, who would be happy to be CEOs at more rational levels of income,” said McDonough, according to the report.

McDonough has made similar speeches since he joined the PCAOB last June after 10 years as president and chief executive officer of the Federal Reserve Bank of New York.