How do we Tackle Runaway Executive Compensation?

We all know that Executive compensation in the United States has been skyrocketing over the last few years, even as general wage levels stagnate. While there is the important issue of fairness in compensation, this post is not about that aspect of the issue. Let's focus instead on another harmful consequence -- such high levels of compensation diminish the competitiveness of U.S. firms relative to international competition.

To see what I mean, note that most nations do not even come within an order of magnitude of the U.S. when it comes to wage differentials between the highest and lowest paid employees ( there is a good graphic here -- http://www.pbs.org/now/politics/executivepay.html ). In the U.S., a tremendous amount of money that could otherwise be plowed into infrastructure upgrades, worker education, R&D, etc. is essentially wasted compensating those at the top. The overall effect of this waste probably varies industry by industry, but it is certainly non-trivial.

In light of this problem, can anyone give good reasons not to get serious about reducing executive compensation. Of course, how it is done is an important question; measures have been tried in recent years with counterproductive results. What is clear is that corporate America will never get its own house in order. It seems that for anything to happen the changes must be regulated in somehow.

Can anyone think of some effective yet politically viable ways to tackle the executive compensation problem?

look for the union label. frankly, i don't care if the ceo is making a gazillion dollars as long as the janitor is pulling down at least $35k and full bennies including dental and vision, and has a decent pension plan that's insured and guaranteed. and having a union work place usually means a safer and healthier work environment.

... but from a practical standpoint even if the janitor is making $35k, etc., there is good reason to limit executive compensation on the grounds that such salaries needlessly hurts the firm's competitiveness. If the plant goes under the janitor is out of a job too.

a publicly-traded company would be limited to a multiple of the lowest paid worker's compensation.

But with regard to "politically viable," I'm not sure Congress would go for it.

you are right...it will never happen.

...but that idea seems like a good one. Even though it would be great to just set a relative compensation limit like that, perhaps politically it would be better to offer some sort of incentive to companies that voluntarily abide by the practice. Unfortunately this might not be enough -- some kind of stick would probably be needed in addition to a carrot.

Then US corporations will become takeover targets for non-US companies with saner compensation structures.

that they deserve as owners. The laws as they currently exist allow the executives to completely control a company for their own enrichment, despite the wishes of the majority of the shareholders.

Eventually, people will realize what a scam Wall Street is, an will stop giving their retirement money to these crooks, and then maybe things will start to change.

Can you give some examples?

With no exemptions based on source (capital gains etc.)
That will fix it in no time flat.