According to a report on Reuters, on Monday Treasury Secretary Timothy Geithner said that the government should not be involved in setting corporate executive pay levels. 

What impact, if any, this will have on how regulation of compensation plays out is unclear, but it does once again bring to the fore the arguments on both sides of the executive pay discussion.

For years, the prevailing wisdom has held that executive compensation should be tied to a firm's equity. That way, the theory goes, management's goals are aligned with shareholders' interests.  

This thinking is fine if you're a shareholder. However, what about bondholders? "If you're compensated only with equity, you're not worried about creditors losing money," points out Alex Edmans, a professor of finance at Wharton who has researched executive compensation. He also is the author of a recent study, "Inside Debt." 

Companies are either surprised by the say-on-pay provision in the financial reform bill or dismissing its importance, judging from a new Towers Watson survey.

It found that only 12 percent of respondents said they are very well prepared for the say-on-pay legislation, while 46 percent said they were somewhat prepared. Some 22 percent said they didn't know if their companies were ready.

Anyone counting on regulation alone to prevent the world from falling into another financial black hole will be sorely disappointed, a group of experts warned in an article published yesterday by the International Federation of Accountants.

The experts say that all key parties to the financial disaster--from regulators to managers and investors--share the blame and that tighter regulation alone can therefore go only so far to prevent another crisis from materializing. 

Anyone counting on regulation alone to prevent the world from falling into another financial black hole will be sorely disappointed, a group of experts warned in an article published yesterday by the International Federation of Accountants.

The experts say that all key parties to the financial disaster--from regulators to managers and investors--share the blame and that tighter regulation alone can therefore go only so far to prevent another crisis from materializing. 

The financial reform bill passed by the Senate would do a lot more than require a say on pay from shareholders. And its other provisions could do much more to limit excessive compensation for top management, experts say.

The Restoring American Financial Stability Act of 2010, recently approved by the Senate and now part of conference committee discussions with the House, would not only provide for a shareholder vote on executive compensation disclosures, which is non-binding in any case. The bill would also require that each member of the company's compensation committee be an independent member of the board.

 The anti-executive pay movement is building momentum.

About 55 percent of shareholders of KeyCorp last week gave the thumbs down on the bank's pay package contained in its proxy during an advisory vote.

 If the recent "no" Say- on- Pay votes at Motorola and Occidental Petroleum   indicate anything, it's that shareholder activism and populist ire regarding executive compensation have real legs. The majority of shareholders at those companies rejected proposed pay packages in a non-binding vote. But those decisions are only the tip of the iceberg, at least as far as changes to executive comp go.

In fact, over the last 24 months, public and shareholder pressure has led one in three Fortune 500 companies to change their executive pay plans, according to Doug Frederick, head of Mercer's Executive Benefits Group, who was quoted recently in  Plansponsor.com. And,  in case you were wondering, those changes generally haven't involved increases.

To follow up on Steve Taub's blog from the other day, more companies are running into resistance from shareholders to what they see as excessive executive compensation.

True, the latest rebellions are occurring in the UK, but governance practices increasingly know few boundaries, or at least find the pond not much of one.

After nine months of service, Jeffrey Schwartz resigned in 2008 as chairman and CEO of ProLogis, an operator of distribution and warehouse facilities. He walked away with a $6 million separation agreement, representing two times his annual salary and target bonus and another $7.5 million to replace the equity grant he received only nine months earlier. These were options that were granted with a term of 10 years, but were paid out in cash in less than one year.

Such payments in this economic climate raise the eyebrows of folks like Greg Ruel, research associate for governance research firm, The Corporate Library, who wrote a recent research report on severance payments. The Corporate Library looked at severance packages during proxy years 2008 and 2009. In total, more than $315 million was paid out to CEOs across the 125 severance packages examined for the report. That figure includes only cash paid to settle contractual salary and bonus arrangements, and does not incorporate other monies gained upon termination of employment, such as equity profits or pension and deferred compensation increases. The average severance package for 2009 was $2.62 million, up 9 percent from $2.40 million in 2008.