54 Hastings L.J. 437 (2002-2003)
Should Directors Reduce Executive Pay

handle is hein.journals/hastlj54 and id is 473 raw text is: Should Directors Reduce
Executive Pay?
by
RANDALL S. THOMAS*
Introduction
America is rapidly becoming a two-tiered society. Over the past
two decades, the gap between worker and executive pay and the size
of societal income inequalities have increased rapidly.' Companies
have made large awards of potentially lucrative stock options to
corporate executives and highly skilled workers, whereas at the lower
levels of the job ladder, compensation has risen much more slowly
While the starkness of these trends was masked by rapid economic
growth in the late 1990s, those at the top end of the pay scale received
a disproportionate share of this new wealth.
After years of lurking in the wings, the collapse of the Enron
Corporation and the ensuing corporate governance crisis, coupled
with the current economic recession, have thrust these internal
corporate pay disparities onto the center stage of American life.
Congressional hearings on the vast differences in the way that Enron
Corporation treated its top executives and all other workers have
filled the media with shocking stories that have outraged many
* Professor of Law, Vanderbilt University School of Law. I would like to thank
Jennifer Hill for her comments on a draft of this paper, and Katherine Knight Schultz and
Dong-Wuk Yuk for their research assistance in this project.
1. See, e.g., PAUL RYSCAVAGE, INCOME INEQUALITY IN AMERICA: AN ANALYSIS
OF TRENDS (1999); Daniel H. Weinberg, A Brief Look at Postwar U.S. Income Inequality,
in BUREAU OF THE CENSUS, CURRENT POPULATION REPORTS, 1 P60-191 (1996); see
also Constance Mitchell Ford & Patrick Barta, Income Gap Broadens Amid Boom, WALL
ST. J., Jan. 18, 2000, at A2 (low-income workers' salary gains are tiny compared with the
enormous gains of professional workers in high tech and other industries). But see Jon E.
Hilsenrath, Income Gap Narrowed at End of '90s, WALL ST. J., April 24, 2002, at A2
(reporting some narrowing of income gap, although [fqew doubt that the gap between
rich and poor has widened substantially during the past 30 years).
2. Patrick Barta, Rises in Many Salaries Barely Keep Pace with Inflation, WALL ST. J.,
Feb. 1, 2000, at A2.

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