But the crisis has cast a spotlight on a wider universe of corporate compensation, particularly golden parachutes. (CEOs at Fannie Mae and Freddie Mac already were denied their golden parachutes, and when the government took over AIG, CEO Robert Willumstad voluntarily forfeited his $22 million exit package.)
"This may be the kind of wake-up call that boards need, because investor anger and regulatory action haven't woken them up," says Broc Romanek, a former Securities and Exchange Commission chief counsel and editor of CompensationStandards.com.
To some pay critics, many boards have long been asleep at the wheel. "We have been calling attention to out-of-control CEO pay for the last dozen years," says Mike Lapham, project director of the Responsible Wealth project at United for a Fair Economy, which favors paying CEOs no more than 25 times what their lowest-paid worker receives.
Lapham's efforts have gotten little traction. Criticism over executive pay has often fallen on deaf ears during bull markets that enrich investors. Even now, it's hard to prove that excessive CEO pay has had much to do with the underlying problem.
Yet the current financial meltdown has made placing curbs on executive compensation more acceptable even among current and former CEOs.
CNX Gas CEO Nicholas Deluliis notes that government intervention into financial markets is generally bad for taxpayers and financial markets and that capping executive compensation is inconsistent with capitalism. "However, if direct government intervention into the markets is a reality, then the taxpayer takes the place of the shareholder. That means that as taxpayers we should have the power to structure or limit compensation for executives any way we see fit," Deluliis says.
Jay Sidhu, former CEO of Sovereign Bank and now head of private-equity firm Sidhu Holdings, backs pay for performance, but "that means when performance is poor, CEOs should be held accountable and must lose perks and compensation.
"Unfortunately, some boards have not done their job, and Congress has to step in," Sidhu says. "Rubber-stamp boards must end."
Some already have. In May, insurer Aflac became the first U.S. company to let shareholders vote on the compensation of CEO Dan Amos. Of those casting votes, 92% approved Amos' $12 million package. But it was largely symbolic, because the vote was non-binding.
David D'Alessandro, CEO of John Hancock Financial Services from 2001 to 2004, says limiting pay, or even ending golden parachutes, isn't as key as time. CEOs should not get big paydays when they leave but should wait for five years so that shareholders can assess if any of their decisions resulted in long-term damage, he says.
Departed financial chieftains at some of the firms caught in the mortgage meltdown didn't have to wait for golden parachutes to collect eye-bulging compensation, says Equilar, a compensation-consulting firm. According to senior analyst Andrew Gordon and research manager Alexander Cwirko-Godycki, total 2005-2007 pay for executives heading troubled financial firms:
• Angelo Mozilo, former CEO of ailing mortgage lender Countrywide Financial, made $362 million in salary, bonuses, stock-option gains and perks ranging from country club fees to personal use of corporate aircraft.