Today's NYT (online) business section features an article exclaiming the lack of empirical evidence of excessive compensation encouraging excessive risk-taking:

http://www.nytimes.com/2009/09/27/business/27stra.html?_r=1&ref=business


In so far as anyone can generate empirical evidence of what's going on inside a person's head, I mean.

Harvard Prof Lucian Bebchuk (no bastion of liberal progressivism, I assure you), on the other hand, points to the obvious: stock options reward successful risk taking, but do nothing in the event of failure.  

Granted, fixing executive compensation laws won't likely solve the problem -- in this the NYT is correct -- and certainly there are other alternatives.  For example: letting only long-term shareholders vote, thus making boards beholden to only those with long term interests; or, as my last blog post points out, putting a government official on the board. 

Nevertheless, I suspect this "empirical evidence" bs is the enemy's foot in the door.
The "we can't win by claiming execs deserve all this money...but if we say it doesn't *hurt*...."