April 10, 2006
I favor the proposed rules but believe they do not go far enough to curb the momentum behind excessive executive pay. Having served on the Board of a public company (not Bank of New York), I know that executive self-interest will combine with the rationale that retaining and attracting top talent requires the type of compensation that we are now seeing.
I agree that government should not set executive compensation. However, I favor placing disincentives on pay packages that exceed the mean of public companies in developed nations. Eliminate the tax-dedutibility of the amount considered excessive. Further, impose a luxury tax on the amount judged to be excessive.
I see a strong parallel between excessive executive compensation and, years ago, the absence of full standards in the automotive industry. Alone, none of the auto companies could or would change the product in ways that yielded higher fuel efficiency. With a mandate that none could avoid, all changed and, additionally, the product improved.