More Than Ever, It Pays to Be the Top Executive - Mergers, Acquisitions, Venture Capital, Hedge Funds -- DealBook - New York Times

The Dealbook link and the NY Times link.

The money quote from the Dealbook article:

But all the attention on chief executives as business superstars raises new questions. In a report published last year, Moody’s Investors Service said it would start taking into account the difference in pay within an executive team in its bond ratings.

“It raises issues of key-person risk and of whether the C.E.O. has too much authority,” Mark Watson, managing director of the corporate governance group at Moody’s, told The Times. “We are rating the company, not the person. A bus might come by and knock the person over.”

Emphasis mine. Well, I guess the intuition is compensation is probably an indicator of relative power wielded by the CEO vs number 3 executive. If it is a good indicator, and Moody's starts factoring that into their credit assessments, then it may encourage self-regulation. However, what's to stop the escalation of pay for number 2 and number 3 to keep up with the Joneses or just to work around the system?