Is CEO compensation justified by performance and should the

Is CEO compensation justified by performance and should the government regulate the pay?

Solution

president announced a set of executive compensation limits aimed mainly at firms that are the recipients of federal aid under the Troubled Asset Relief Program (TARP). The rules place a $500,000 cap on salaries. Any additional compensation will have to be in the form of restricted stock grants that will not vest until after taxpayers are repaid. In addition, all banks must accept new limits on golden parachutes, requirements that shareholders be able to review and vote on compensation packages (the vote would be non-binding), and tougher disclosure rules for spending on travel, office renovations and entertainment.