What are the pros and cons for a government to impose salary caps aimed at restricting ceo salaries?

The Australian government has recently been under pressure to place caps on salaries in light of the recent behaviour of some CEO's. Pacific Brands and Telstra, have both had CEO's with pay packets in the multi-millions and huge bonuses whilst they downsize employment numbers.

What are the pros and cons for this? I'm having trouble thinking of any of the benefits or faults with this type of idea.

Con: restricting salaries would tempt execs to change jobs.

PRO: A CEO gets a $50M salary and loses $5BILLION dollars, for that kind of Performance He should be run thru the door not shown the way to it.

All such decisions are made one of two ways.

a) Voluntarily - mutual consent, contract etc.

b) Violence - threats of force or actual force.

There is no third way. It isn't even possible for a third way to exist.

Your question REALLY is "What are the pros and cons of imposing economic decisions through violence?"

Still having trouble thinking of any faults?

Well, first a reality check. Although in theory large corporations are owned by stockholders, in practice those stockholders have little say in how most companies are run. Management is autonomous.

That being the case, there needs to be some check on abuses by executives. There is a better solution than salary caps, however. Instead, top executives should have their bonuses tied directly to performance--including whether or not rank-and-file employees are faring well under company management, not just profits. And executives should be required to publicly disclose their compensation packages AND other investments and interests where those may affect or conflict with their duties as an executive officer.

I'm not a fan of government intervention to that degree. But unless you want to get really radical, and reform corporate structure so control is returned to stockholders, that's about the best anyone is going to do.

As to the latter--how about banning proxy voting and allowing shareholders to vote at stockholder's eetings online? That would create a real check on management power.