This study examines the changes of CEO pay in the US financial and banking industry during the credit crunch. The results show that total CEO compensation has been declining during the crisis. The proportion of fixed components in executive compensation packages (i.e. base salary) has been on the increase since 2007, while the variable performance contingent pay (i.e., bonuses, stocks, and stock options) has been reduced. Our findings are in line with the optimal contracting theory (Murphy, 1999), indicating that effective contracting has largely confined excessive CEO pay during the bad performance period. In addition, the managerial power approach (Bebchuk and Fried, 2003) could also explain our findings in the sense that executive compensation could be controlled by public outrage and difficulty of camouflage.