The current compensation system in organizations is broken (The Pay Problem, David Owen, New Yorker, October 12, 2009). One solution to excessive executive compensation is to take seriously the fact that a corporation's success is contributed to by every member of the organization from the janitor -- if that role has not been outsourced -- to the research scientist at the bench, to the middle managers, up to the CEO.
Yes, each makes a differential contribution. Let this be reflected in their base salaries. But when it comes to bonuses based on the firm's performance, let each share the same percentage. In dollar terms, the differential will be there, but each will be rewarded for the firm's success.
I doubt that this can be sanctioned by law, but it seems like a good norm for companies, their compensation committees, and their shareholders to adopt.
Sent to the New Yorker