Tuesday, April 20, 2010

Draft of New PS Program

A draft of the new PS program prepared by a committee headed by Pierre Moscovici can be consulted here. It proposes a limit on executive "salary" of 20 times the minimum wage, which would work out to 322,000 euros per year. This proposal is called "demagogic" here. And examined more fully here. It's also a bit vague, since it is not specified whether salaire includes stock options, deferred compensation, and other perquisites of life at the top. It's also not clear whether it's a good idea. As much as one may think that executives are overcompensated--and I do--there are risks in fighting the market in this way. Can such judgments be made across the economy as a whole? Might it not be better to impose regulations on corporate boards and compensation committees, say, by requiring that these groups include representatives of the public and publish justifications of their compensation decisions?

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