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Actually, Roachboy, it's less a political decision than a legal one. The Ben & Jerry's case that you raised is instructive. When Cohen and Greenberg were the private owners of the company, they had the choice to run the place as they liked. They could make hiring decisions, firing decisions, bonus decisions, raise decisions, acquisitions, divestittures, relcoation - you name it - precisely as they liked, because they owned the business and they didn't have anyone to answer to except themselves. If they felt it was important to keep their own comp down relative to those lower in the hierarchy, that was their choice. I'm sure the business benefitted from it in some way, or they did. Even if not, it was their buisness, they could make that choice.
Once you have public shareholders the calculus is very different. The board and officers are fiduciaries, which means their legal obligation is to act in the best interests of shareholders. There is a huge amount of literature about the degree (if any) to which corporate boards are required to account for other constituencies such as employees or the local community, and as it shakes out legally, they can account for those other constituencies if there is a corporate benefit that ultimately inures to the shareholders - call it enlightened self-interest.
Bear in mind that the typical shareholder is not a plutocrat. The typical shareholder is a pension fund. It has its own fiduciary obligations and its own funding targets. It has to get returns because retirees are depending on it. There are lots of other categories of shareholders, but if you drill down through the shareholder body, what you'll find as the common denominator is that they all want to or need to maximize returns (within the bounds of the law and ethics, of course). No corporate board has the right to ignore that, either legally or morally. If you want I can point you to some literature about why it makes economic sense to do this.
The bottom line is that the market for executive talent will dictate what executives are paid, and the market for other niches of talent will dictate what people in that niche are paid. Private companies will do as they please. Public companies cna't and won't. The money to pay execs isn't coming out of employees' pockets - it's coming out of shareholders' pockets.
And yes, there will always be some abusers - those people, like Dennis Kozlowski or Andy Fastow, should go to jail and be fined, big time.
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