Should The Feds Regulate Executive Pay?

From tomorrow's NY Times::

WASHINGTON — 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.

The outlines of the plan are expected to be unveiled this week in preparation for President Obama’s first foreign summit meeting in early April.

Increasing oversight of executive pay has been under consideration for some time, but the decision was made in recent days as public fury over bonuses has spilled into the regulatory effort.

The officials said that the administration was still debating the details of its plan, including how broadly it should be applied and how far it could range beyond simple reporting requirements. Depending on the outcome of the discussions, the administration could seek to put the changes into effect through regulations rather than through legislation.

One proposal could impose greater requirements on the boards of companies to tie executive compensation more closely to corporate performance and to take other steps to assure that outsize bonuses are not paid before meeting financial goals.

The new rules will cover all financial institutions, including those not now covered by any pay rules because they are not receiving federal bailout money. Officials say the rules could also be applied more broadly to publicly traded companies, which already report about some executive pay practices to the Securities and Exchange Commission. Last month, as part of the stimulus package, Congress barred top executives at large banks getting rescue money from receiving bonuses exceeding one-third of their annual pay.

I've heard Obama use the line "excessive compensation" several times when talking about corporate America. When did it become the job of the government to decide how much somebody can make?

Corporations have Boards of Directors and shareholders who act in an oversight capacity for the compensation packages for their firm's employees. Compensation is only "excessive" if they say it is, not if the government says it is. That's part of what freedom is all about.

Compensation is a major factor in corporate recruiting, and if certain industries are singled out for special regulatory treatment, there will be a "brain drain" as executives seek positions in industries that are not subject to such onerous requirements. This will hurt those companies who are stuck with these regulations.

This is not about protecting consumers. It's about "fairness" as Obama and the left understands it. To them it's not fair that the corporate chiefs make a lot more than the corporate indians. Once again they seek to punish achievement.