The U.S. government has proposed federal contractors’ salary be tied to that of the President’s $400,000 annual pay, the Washington Business Journal reported Friday.
Jill Aitoro writes the current method for setting the executive compensation cap is by using the median compensation of the five highest paid executives of publicly traded companies with sales of more than $50 million per year.
In line with that plan, the cap is supposed to increase to $950,000 from $763,000 next week.
“Tying the cap to the President’s salary provides a reasonable level of compensation for high value federal contractors while ensuring taxpayers are not saddled with paying excessive compensation costs,” federal procurement policy administrator Joe Jordan wrote in a blog post.
The cap would not apply in cases where an agency needs additional money to tap the skills of scientists or engineers, the Washington Business Journal reported.
Jordan said the proposal would apply to defense and civilian contracts, according to the website.
Aitoro writes the effort to lower executive salaries began in September 2011 when the administration wanted to cap the pay of contracting business leaders at the Cabinet secretaries’ salary of $200,000.