Gov’t has no business in the executive compensation-setting business. Since mutual funds and money managers generally receive a percentage of the assets they manage, a decline in asset values is a decline in income. Undoubtedly, these parties have incurred serious reductions in fee income. So why haven’t they bonded together to tell Wall Street and Boards that here is what we expect and effective on this date (perhaps 12 months in the future) we will stop buying your stocks, bonds, preferreds, convertibles, etc. if you are not incompliance. (Game of chicken? Perhaps, but I suspect if the industry bonded together with a set of rational principles, marketed properly to investors, companies that didn’t initially participate would suffer. Their Weighted Average Cost of Capital or WACC would go up as secondary offers would be priced lower than what their participating peers could get and interest on new debt would be higher vis a vis their participating peers.)

The bulk of executive pay should be back-end loaded, meaning can’t be monetized for a 5-10 period, including on a change of control event. This would force executives to build companies, make smart capital investments, develop succession plans, continuously train personnel and enter into mergers that truly create shareholder value.

Mutual funds, money managers benefit because the pie gets bigger, meaning that even if, for example, a mutual fund maintains the same market share, the value of all stocks and bonds would be larger, so their fee income would grow.

But these parties have been silent and sadly government has put its nose in another place it doesn’t belong. The question is why have these parties been so silent, why haven’t they been more outspoken?