Crackdown on Executive Pay: Too Much or Not Enough?

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Published  in Knowledge@Wharton October 28, 2009


Last week, the Obama administration’s “pay czar,” Kenneth Feinberg, announced that the government will impose caps on compensation for the 25 highest-paid executives at seven companies that received “exceptional assistance” through the Troubled Asset Relief Program — including American International Group (AIG), Bank of America, Citigroup, Chrysler, Chrysler Financial, General Motors and GMAC. Under the new regulations, salaries will be reduced by an average of 90%, and total compensation (including bonuses and stock options) will be lowered by 50%. Knowledge@Wharton spoke with Wharton accounting professor Wayne R. Guay and then with finance professor Alex Edmans about what these changes could mean for Wall Street, company shareholders and taxpayers.

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