Deferred Compensation

Camp also proposed two other significant changes to executive compensation -- limits on deferred compensation that would raise $9.2 billion and limits on pay for nonprofit executives that would raise $4 billion.

The proposal on deferred compensation would make it tougher for companies to set up pay packages for executives that push their taxes into the future.

The change for nonprofit groups would impose a 25 percent tax on executive compensation exceeding $1 million a year. According to a 2013 study by Charity Navigator, nine of 3,929 charities studied paid more than $1 million. That included the Boys & Girls Clubs of America and National Jewish Health.

Washington-based trade associations would be affected, too. The U.S. Chamber of Commerce paid Thomas Donohue $4.95 million and the Edison Electric Institute paid Thomas Kuhn $6.81 million in the most recent tax years available when Bloomberg did a May 2013 study.

‘Significant Benefit’

“Given that exemption from federal income tax constitutes a significant benefit conferred upon tax-exempt organizations, the case for discouraging excess compensation paid out to such organizations’ executives may be even stronger than it is for publicly traded companies,” says the Ways and Means Committee justification for the provision.

Corporate compensation committees often peg a substantial portion of CEO pay to competitors as a way of retaining talent. Pay packages for executives can include cash bonuses, stock options, restricted stock and deferred compensation.

Non-qualified deferred compensation plans are offered to executives as a supplementary way to put aside tax-preferred savings for retirement beyond the limits set for most workers in 401(k) plans.

Marc Trevino, a partner at Sullivan & Cromwell LLP in New York who specializes in compensation, said companies would probably react to the combination of proposals by increasing base salaries and retaining performance-pay structures if Camp’s plan became law.