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Executive Pay Limits

A Wall Street Journal article today (May13), describes Obama administration efforts to take some action in the area of limiting employee and executive compensation in the finance sector, banks especially.  While limits on amount of pay is the headline item, the article mentions two items that should be discussed further.

The first of these regards what should be done to align compensation more with long-term performance and less with annual incentives.  This is an objective that I have repeatedly proposed as a key to healthier economic growth and less extreme boom and bust cycles.

The second topic that could be of benefit is the suggestion that there should be a "best practices" guide for structuring pay packages for executives and highly compensated employees.

While I believe that establishing compensation limits by decree would be a counter-productive move,  I think it is obvious that the incentives of the recent years have been misplaced.&n... The compensation plan has been:  Make money now, the future will take care of itself.  Then compensation plan should be:  Take care of the future and we will pay you then.