Executive Compensation

Some people are arguing to eliminate the 1 million dollar cap on expensing executive salaries. That law, which intended to curb CEO pay, led to greater use of stock options, which led to more pro forma statements and more manipulation of earnings to hit quarterly targets. Let this be a lesson. When there is a market for something, (like good CEOs) and we think it is out of balance(they get paid too much), you don't "fix" it by passing a law that is effectively a price ceiling. Then people just find other ways to compete (i.e. stock options). You fix it by introducing more competition. Granted, this is harder to do, especially in a market like CEOs, but there are ways…

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