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Executive Compensation Limits Expanded

Jan.05.2012

Section 803 of the National Defense Authorization Act of 2012, signed by the President on December 31, 2011, expands the existing limit on "senior executive" compensation to cover all employees and purports to apply the new allowability limitation effective January 1, 2012, to existing contracts, although "the Secretary of Defense may establish one or more narrowly targeted exceptions for scientists and engineers upon a determination that such exceptions are needed to ensure that the Department of Defense has continued access to needed skills and capabilities." The most recent cap published by the Office of Federal Procurement Policy was $693,951 for 2010 (no cap was published in 2011, apparently for political reasons), so as a practical matter the expansion of the cap to all employees is likely to have limited impact, but the provision purporting to apply the new limit to existing contracts is almost certainly unenforceable.

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For more information, please contact the professional(s) listed below, or your regular Crowell & Moring contact.

Terry L. Albertson
Senior Counsel – Washington, D.C.
Phone: +1 202.624.2635
Email: talbertson@crowell.com