Limiting executive pay

The rarefied pay packages of corporate bigwigs have always peeved Americans farther down the capitalist pay scale, but the dichotomy is harder to stomach in these dire economic straits. With unemployment approaching 10 percent and even people with jobs struggling to make ends meet, the return of big Wall Street paydays, especially at firms spared from the abyss by taxpayer bailouts, rankles even more.

While several big banks hustled to repay the government to avoid what they regarded as onerous oversight, seven big companies in which Washington retains a financial stake have been ordered to slash compensation for their top 25 employees. Under rules issued by Kenneth R. Feinberg, the Treasury Department's pay czar, cash salaries will be limited to $500,000 for most of the affected employees. They will still be entitled to bonuses and stock but tied to company performance over several years.

In a more far-reaching move, the Federal Reserve announced that it would police banks' pay policies to try to discourage the reckless gambles that contributed to the financial meltdown. Although the Fed would not set compensation, it would review -- and could veto -- questionable pay packages at banks, including thousands that never received federal bailouts.

There is much posturing in these exercises -- an effort to tamp down public anger about outsized compensation -- and one should never underestimate the ability of financiers to divine ways around the restrictions.

But both initiatives strike at the itch for short-term profits, which fueled the excesses that led to the financial implosion, and aim to prod corporations to take a longer view of risks and rewards.

Although the titans of finance complain that the restrictions will send their brightest, most-driven executives to other firms or lines of work, that's not a bad idea. Their ingenuity could be better applied in other fields less susceptible to inadvertently wreaking economic havoc.

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