U.S. Rep. Barney Frank (D-Mass.), the new chairman of the House Financial Services Committee, is always looking for allies for his campaign to rein in executive compensation. But, no doubt, even he was surprised when President George W. Bush turned up on the same side of the fence. In recent weeks, the president has taken several opportunities, including on a late January visit to Wall Street, to criticize excessive executive pay. The nation's chief executive called on shareholders to take a hard look at executive compensation packages. "[Executive compensation] is one [issue] where politicians on both sides of the aisle see opportunity," says Patrick McGurn, executive vice president and special counsel at Institutional Shareholder Services (ISS). He notes that Bush's message about shareholders being empowered to challenge management is identical to Frank's. He adds: "They're basically saying the same thing–it's just that one is suggesting a governmental approach and the other is stressing the private sector."

Frank has scheduled hearings for March 8 on executive comp and is expected to push for legislation calling for advisory votes at companies on executive pay programs, similar to the practice in the U.K., and shareholder approval of severance packages to top executives. "The prospects of legislation are pretty high," says Mark Borges, a principal with Mercer Human Resource Consulting, who adds that the timing of Frank's hearings during proxy season could not be better. "They will have plenty of examples [of excess pay] to grab attention," says Borges. While he supports the notion of shareholders being able to send a message of approval or disapproval on compensation practices, the mechanics of how a company responds to such votes have not been spelled out. "The idea on paper sounds good, but I think it's going to be very difficult for companies to know what to do."

Still, neither Borges nor anyone else expects the House to legislate actual caps, noting that Congress does not have a good record in dealing with these types of issues legislatively. The last time Congress got this heated up over executive compensation was in the early '90s, when the deductibility of executive compensation was capped at $1 million. Alice Rivlin, a senior fellow in the Brookings Institution, was at the Office of Management and Budget in the Clinton Administration when Congress tinkered with exec comp. "I was there and it was a mistake," she says. "If it had any effect at all it was to drive companies towards stock options and other forms of compensation. And that's not exactly a resounding victory."