getting around the CEO pay cap

Back to good intentions and unintended consequences on the CEO pay cap...

Here's Jason Zweig in the WSJ...

Of all the decrees that come spewing continually out of Washington, there is only one that works every time: the law of unintended consequences.

This past week, the Obama administration slapped a $500,000 cap on cash compensation for senior financial executives whose firms receive future federal aid. That put an official U.S. stamp on the outrage of the investing public....

Wall Street got its just deserts. Unfortunately, while this move rightfully punishes yesterday's fools, it may inadvertently create tomorrow's culprits....

If only it were so simple. "The search for ways to get around this," says one expert on Wall Street compensation, "started within minutes of the announcement."

For starters, the limits seem to apply only to "senior executives" -- the chief executive, chief financial officer and the like -- and not to many of the people who can earn the really big bucks on Wall Street, like traders, hedge-fund managers and the mad scientists who cooked up all those derivatives that almost destroyed the world financial system....

Outsourcing is another way to get around a pay cap....

Finally, the new rules from the Treasury Department permit Wall Street's "senior executives" to get incentive pay in the form of restricted stock or similar long-term incentive arrangements....

Wall Street imploded largely because the inmates -- the star traders and quant geniuses -- took over the asylum. Paying the wardens less won't put the inmates back in their cells.