In The New York Times, Cornell economics professor Robert H. Frank makes the case that executive compensation isn't as big of a problem as so many are convinced it is.

Frank writes that "In the past, a C.E.O. could often stay in the job for many years despite lackluster performance. Today, a C.E.O. who fails to deliver is often dismissed after a year or two."

I'm not sure what planet Mr. Frank is on. It might be true that executives don't last as long as they used to on average, but the financial markets are full of underperforming companies run by ineffective CEOs. When changes are made, it's often as a result of prodding by activist shareholders rather than by proactive decisiveness on the part of the board of directors. Then there's this ridiculous point:

If the market for executive talent is competitive, critics ask, why are C.E.O.'s in an industry paid about the same, regardless of performance? That's because no one knows with certainty how a particular executive will perform.

Exactly. But the point of pay for performance is to align executive compensation with performance. If they do well they make a lot of money, and if they don't then they don't. Mr. Frank seems to concede here that pay for performance is essentially a myth.

That said, I basically agree with Frank's point that imposing congressional limits on executive pay is a bad idea. Limiting tax deductibility would simply lower shareholder returns.

But maybe there's an alternative. If Congress imposed a limit on the tax deductibility of executive pay (one with teeth, not one that provides a giant loophole for anything that is tied to "performance") and then used the extra revenue produced to buy down capital gains tax rates, the result would be to provide an incentive for companies to limit executive pay while also giving a portion of the money back to shareholders when they pay excessively.