How Washington can fix executive pay


As The New York Timesreports, "The Obama administration will call for increased oversight of executive pay at all banks, Wall Street firms and possibly other companies as part of a sweeping plan to overhaul financial regulation, government officials said."

There are really two separate issues here. The most immediate one is the issue of taxpayer-subsidized companies whether government, as the shareholder that saved the company from bankruptcy, has every right and responsibility to demand that pay be reasonable. But for other companies -- those which weren't saved by Uncle Sam -- there's really no compelling reason for the government to start dictating how executives should be paid. But at the same time, the events of the past year (and long before that too) demonstrate that there is a serious disconnect between the way companies pay their CEOs and the way they should pay their CEOs if the goal is maximum shareholder value.