Government to set executive salaries

The WSJ has this:

The Obama administration has begun serious talks about how it can change compensation practices across the financial-services industry, including at companies that didn't receive federal bailout money, according to people familiar with the matter.

The initiative, which is in its early stages, is part of an ambitious and likely controversial effort to broadly address the way financial companies pay employees and executives, including an attempt to more closely align pay with long-term performance. . . . .

Is this serious? Who is more likely to figure out the interests of the shareholders? The government or the shareholders? Who is more likely to figure out what the right way to motivate workers is? The government that runs the post office or shareholders?

Now we learn in the Washington Times that a top Treasury nominee is going to get compensation from his company while working for the government.

President Obama's nominee for the Treasury Department's top legal job still can receive almost $3 million in pay over the next three years from one of the nation's largest financial-services companies under a compensation plan approved by government ethics lawyers.

If confirmed as the department's next general counsel, George W. Madison would earn a government salary of $153,200 and get an additional $955,000 next year from his previous employer, TIAA-CREF, as a participant in the New York-based company's "long-term compensation plan," according to a government ethics filing. . . . . .

Note that the Bush Administration once tried merit pay for government workers, but that the Obama Administration is getting rid of it (though he supports it for teachers).

Bush Aims to Expand System of Merit Pay
Unions Criticize Plan Based on DHS Model
By Christopher Lee
Washington Post Staff Writer
Tuesday, July 19, 2005; Page A02

The administration wants to abolish the General Schedule pay system by 2010 and require that at least part of every pay raise for the government's 1.8 million civilian employees hinge on an annual performance evaluation, President Bush's top management guru said yesterday.

Clay Johnson III, a deputy director of the Office of Management and Budget, laid out a proposal to expand government-wide the kind of pay-for-performance systems being implemented at the departments of Defense and Homeland Security as part of the recent restructuring of civil service rules at those agencies.

"The federal government, as a rule, is pretty bad about managing people," said Clay Johnson III, a deputy director of the Office of Management and Budget. (By Lauren Victoria Burke For The Washington Post)

"The federal government, as a rule, is pretty bad about managing people," Johnson said yesterday in a meeting with Washington Post reporters and editors. "We tend to treat people and manage our people as if they are bureaucrats. 'They are all the same, let's treat them all the same.' The goal is to treat them, and to think of them, as professional public servants, not as bureaucrats. . . . Until we can tie some small portion of pay to it, it will never happen."

The administration's draft bill, which it is circulating on Capitol Hill, was criticized by federal employee unions. They have complained that the changes at DHS and Defense undermine employee rights and strengthen the hand of political appointees. . . .