Texas House Bill HB5279

Texas 2025 - 89th Regular

• Filed: 3/14/25

Caption

Relating to consideration of the compensation of a vendor's chief executive officer as an additional relevant factor in determining the best value for the state when awarding a state contract.

Impact

The intent of HB 5279 is to potentially reduce extreme disparities in compensation between executives and the average employee. By limiting the CEO's earnings relative to the median employee salary, the bill aims to align vendor practices more closely with values of equity and fairness. This could positively influence the overall work environment within those organizations and ensure that contracts awarded by the state favor vendors who are committed to fair compensation practices. The changes in the law, however, will only apply to contracts with bids published after the effective date set for September 1, 2025.

Summary

House Bill 5279 proposes the consideration of a vendor's chief executive officer (CEO) compensation as an additional relevant factor when determining the best value for the state in the awarding of state contracts. Specifically, the bill mandates that state agencies take into account whether the total annual compensation of the vendor's CEO, comprising cash, equity, and other benefits, does not exceed 20 times the median annual compensation of all full-time employees of that vendor. This measure seeks to introduce a standardization of compensation practices to ensure equitable treatment of employees within contracting entities.

Contention

Points of contention around this bill could arise from concerns about how this compensation metric might affect the competitiveness of vendors. Critics may argue that limiting CEO compensation could hinder the ability of vendors to attract top talent for executive positions, thereby impacting the quality of service provided to the state. Supporters, on the other hand, may argue that this measure promotes social responsibility by discouraging excessive pay disparities and encouraging vendors to foster fair labor practices. Overall, the discussions surrounding HB 5279 could involve a broader dialogue about corporate governance and ethical considerations in state contracting.

Texas Constitutional Statutes Affected

Government Code

• Chapter 2155. Purchasing: General Rules And Procedures
  • Section: New Section