As Bloomberg Business puts it, "How Bill Clinton Helped Boost CEO Pay" (http://www.bloomberg.com/bw/stories/2006-11-26/how-bill-clinton-helped-boost-ceo-pay htt

As Bloomberg Business puts it, "How Bill Clinton Helped Boost CEO Pay" (http://www.bloomberg.com/bw/stories/2006-11-26/how-bill-clinton-helped-boost-ceo-pay http://www.bloomberg.com/bw/stories/2006-11-26/how-bill-clin...), or more succinctly: In 1993, Section 162(m) of the U.S. Internal Revenue Code was passed into law. The intent of this law was to reign in outsized executive compensation by eliminating the tax-deductibility of executive compensation above $1 million unless the excess compensation was performance-based. (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=942667 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=942667). I'll also note that those running companies are, by definition in the US, responsible for providing good returns to the owners, AKA stockholders. And it's been noted since 1941 or so, in James Burnham's The Managerial Revolution, that there's a divergence between the interests of managers and owners, so efforts like Section 162(m) are understandable.