Major corporations take shape with the founding of GE in 1892
Bethlehem Steel adopts one of the first executive incentive (bonus) plans in 1902
1920 to 1940 Depression Era Increased Awareness of Executive Compensation
Bonus and profit-sharing plans become prevalent; 64% of companies have established plans by 1928
Stockholders file suits against Bethlehem Steel and American Tobacco Co. in 1931 contesting executive bonuses and options
In 1935, the NY Times publishes names of individuals receiving particularly large compensation
1970s Economic Stagnation
Emergence of performance-based compensation plans tied to financials in response to President Nixon's 90-day freeze on non-performance based wages (including executive pay) in 1971
Use of stock options stagnate as the stock market stagnates, leading new plan designs designed to provide more predictable payouts (e.g., long-term earnings growth performance plans, guaranteed bonuses)
Attack on perquisites in 1977-1978
1980s to early 1990s Focus on CEO Pay
Increased hostile takeover activity leads to development of golden parachute agreements, i.e., payments to executives in the event of change-in-control (CIC)
CIC arrangements become controversial following $4.1 million payment to the CEO of Bendix in 1982
Graef Crystal publishes an expose on CEO pay, In Search of Excess, in 1991
International prominence increases in 1992 as Japanese trade concessions are hindered by excessive executive compensation practices
SEC passes new rules in 1992 on the disclosure of top executive compensation in public company annual proxy statements
1995 to 2000 Internet Bubble
Congress passes the Omnibus Budget Reconciliation Act of 1993, including Section 162(m) of the tax code that limits the deductibility of non-performance-based compensation for the CEO and four highest paid executive officers
As corporate boards shift the mix of executive compensation away from cash toward stock options, corporate profits and the stock market soar to record highs, generating unprecedented gains for option holders
