%hfdxvhh, ¶pp:ruwkk,w" Ceo Pay and Corporate Governance*

*The views expressed here are those of the author and do not necessarily represent the views of the Federal Reserve Bank of Philadelphia or the Federal Reserve System. Recently, there has been strong public outrage against current pay practices for corporate CEOs, regardver the past few years, there has been strong public outrage against current pay practices for corporate CEOs. To deal with this issue, the Dodd-Frank Wall Street Reform and Consumer Protection Act signed into law by President Obama on July 21, 2010 will allow shareholders to vote on executive pay packages and federal regulators to oversee executive compensation at financial firms. Are there problems with CEO pay? According to a recent survey, 98 percent of respondents from major financial institutions “believe that compensation structures were a factor underlying the crisis.” In this article, Rocco Huang outlines what we know about how CEOs are paid, how the pay is set, how CEO compensation affects CEOs’ incentives and actions and their firms’ performance, and how government regulations affect CEO pay.