After examining the scale of CEO pay relative to the average worker and how CEO pay often has little correlation to performance, the AFL-CIO's "2008 Executive PayWatch" calls attention to CEOs control over their own salaries:

"Some CEOs may have far greater control over their pay than anybody previously suspected. Angelo Mozilo, chairman and chief executive officer of Countrywide Financial Corp., brought in a second compensation consultant to renegotiate his package in 2006 when the first one said his pay package was inflated.

In an e-mail message, Mozilo complained to John England of Towers Perrin, who helped redo his pay package: “Boards have been placed under enormous pressure by the left-wing anti-business press and the envious leaders of unions and other so-called ‘C.E.O. Comp Watchers.’” Mozilo’s renegotiated contract with Countrywide included an annual salary of $1.9 million, an incentive bonus of between $4 million and $10 million, perks and fringe benefits, as well as $37.5 million in severance benefits. Under public pressure, Mozilo subsequently agreed to give up the severance package.

Excessive CEO pay is fundamentally a corporate governance problem. The board of directors is supposed to protect shareholder interests and ensure that CEO pay reflects performance. However, at approximately two-thirds of companies, the chief executive officer also chairs the board. When the same person serves as both chairman and CEO, it is impossible to objectively monitor and evaluate his or her own performance.

CEOs also dominate the election of directors. The vast majority of directors are hand picked by incumbent management. Because of the proxy rules, it is prohibitively expensive for long-term shareholders to run their own director candidates. Moreover, even if a majority of shareholders withhold support from directors, they still are elected to the board at many companies.

Ultimately, shareholders have to be able to trust their boards of directors to set responsible CEO pay packages. For this reason, CEO pay will be reformed only when corporate boards become more accountable. Until then, CEOs will continue to influence the size and form of their own compensation, and CEO pay will continue to rise."