Pay Structures and Risk
Recommendations of the Congressional Oversight Panel
Executive pay is a key issue in modernizing the financial regulatory system. However, the common focus on the themes of inequality and "pay for performance" misses the unnecessary risk that many compensation schemes introduce into the financial sector. Altering the incentives that encourage this risk through the tax code, regulation, and corporate governance reform will help mitigate systemic risk in future crises. Executive compensation has been one of the most controversial issues in American business since the late 1980s. In response to criticism that executives’ and shareholders’ interests did not sufficiently align, executive compensation packages began to contain more and…
