The compensation of American executives—CEOs and their “C-suite” colleagues—has long been a matter of controversy, especially recently, as the wages of average workers have stagnated and economic inequality has moved to the center of the national debate. Just about every spring, the season of corporate proxy votes, we see the rankings of the highest-paid CEOs, topped by men like David Cote of Honeywell, who in 2013 took home $16 million in salary and bonus, and another $9 million in stock options.

Rarely, however, does the press coverage go beyond the moral symbolism of a new Gilded Age. Coverage of CEO pay usually fails to show that the scale of CEO pay packages—and the way CEOs are paid—comes at a cost. At the most basic level, the company is choosing to pay executives instead of doing other things—distributing revenues to shareholders, raising wages for workers, or reinvesting in the business. But the greater cost may be the risky behavior that very high pay encourages CEOs to engage in, especially when pay is tied to short-term corporate performance. CEO pay also plays a major role in the broader trend toward radical inequality—a trend that, evidence has shown, precipitates financial instability in turn.

CEO pay has been controversial in the United States for more than a century—for as long as corporate management has been a profession separate from ownership. In economic booms, CEO pay skyrockets and, after the inevitable bust, it attracts attention—as the million-dollar paychecks of executives such as W.R. Grace of Bethlehem Steel and Charles Mitchell of National City Bank drew notice in the 1930s. But the most recent debate focuses on the staggering, uninterrupted rise in CEO pay over the past three decades, following a long period of moderation in both executive pay and in overall economic inequality. Between 1940 and 1970, average CEO pay remained below $1 million (in 2000 dollars). According to the Economic Policy Institute, from 1978 to 2013, CEO pay at American firms rose a stunning 937 percent, compared with a mere 10.2 percent growth in worker compensation over the same period, all adjusted for inflation. In 2013, the average CEO pay at the top 350 U.S. companies was $15.2 million.

Given the polarization and stalemate of current politics, one might expect CEO pay to be one of those issues, like tax loopholes, that the public occasionally gets upset about but the political system, which demonstrably tilts toward the interests of the wealthy, ignores or can’t resolve. But in fact, the cause of restraining CEO pay has had remarkable political success—measured by legislation passed and regulations enacted—since the 1930s, when CEO pay first became a contentious public issue.

The problem isn’t that the political system doesn’t want to deal with excessive CEO pay. There have been any number of formal efforts to rein in executive pay, involving a host of direct regulation and tax changes. But most of the specific efforts to reduce executive pay—through major policies such as a limit on the tax deductibility of high salaries, as well as more modest accounting and disclosure legislation—have fallen short. That’s because the story of skyrocketing executive pay is a story about our conception of the corporation and its responsibilities. And until we rethink our deepest assumptions about the corporation, we won’t be able to master the challenge of excessive CEO pay, or the inequality it generates. Is the CEO simply the agent of the company’s shareholders? Is the corporation’s only obligation to return short-term gains to shareholders? Or can we begin to think of the corporation in terms of the interests of all those who have a stake in its success—its customers, its community, and all of its employees? If we take the latter view, the challenge of CEO pay will become clearer and more manageable.

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It’s strange to imagine, but the position of corporate CEO is a relatively new one in the history of American business, and CEO pay has been controversial for most of that time. According to Harwell Wells of Temple University’s law school, who has written one of the only historical accounts of the CEO-pay debate, before the “great merger movement” of the early 20th century, all but a few companies were small and were run by managers who owned a sizable portion of the business.

At the beginning of the 20th century, the face of industry was morphing from thousands of small manufacturing firms into fewer large corporations. As owners of these companies opted out of day-to-day management, employee-executives gradually took over their roles, and “management” became a profession. It didn’t take long for CEO pay to begin to climb—and for the American people to object.

There is very little information available about CEO pay prior to 1935, when the 1934 Securities Exchange Act implemented Form 10-K, the annual report companies are required to file with the Securities and Exchange Commission. One of the only surveys available tells us that, prior to World War I, the average salary of an executive at a large corporation was $9,958, or $220,000 in 2010 dollars, which would be paltry for most of today’s mid-management, let alone today’s high-level executives.