The Obama administration plans to appoint a "Special Master for Compensation" to ensure that companies receiving federal bailout funds are abiding by executive-pay guidelines, according to people familiar with the matter. The administration is expected to name Kenneth Feinberg, who oversaw the federal government's compensation fund for victims of the Sept. 11, 2001, terrorist attacks, to act as a pay czar for the Treasury Department, these people said.
Pay commissar might be a better title. Corporate boards haven't done a great job of aligning pay with performance, but there's no reason to think that some Obama apparatchik will do any better.
No form of capital is more mobile than human capital. If the mob won't let Feinberg pay market rates for top managers, those managers will simply shift into industries where the government does not (yet) set salary scales. As a result, the firms most in need of skilled managers will be the least able to compete for their services.
It's as though the NFL decided to cap the Detroit Lions' payroll at 50% of the league average. The bottom dwelling Lions would never get better.
