Could It Be? An Actual Dent in C.E.O. Pay?

By HUBERT B. HERRING

Published: July 30, 2006

One could be excused for thinking that in addition to death and taxes, life’s certainties now included ever-rising pay for chief executives. But new data suggest that, wonder of wonders, some changes made after the corporate scandals at the turn of the latest century are having an effect.

In the wake of the granddaddy of the scandals, the Enron meltdown, the Securities and Exchange Commission mandated, basically, that directors and executives could not be one big happy mutual-back-scratching club — that the people who set your pay, for example, can’t be people who work for you.

So more companies ended up with independent audit and compensation committees, as well as more independent directors. And guess what? At those with the most catching-up to do en route to independence, chief executive pay often fell 20 to 25 percent, according to a study by Yaniv Grinstein of Cornell and Vidhi Chhaochharia of the World Bank.

But never fear: top executives won’t need to start getting their clothes at Wal-Mart.

HUBERT B. HERRING