Executive pay too high, warns Bill Gates

Salaries too high

Revered business tycoon and Microsoft chairman Bill Gates has warned that top pay packages on Wall Street are "too high." His warning comes as Microsoft backs proposals to let shareholders vote on how much the firm's executives will be paid.

Gates cited a 1993 US law capping top salaries at $1 million as the reason for too high pay packages; suggesting that the cap had led many firms to offer executives massive share options instead.

The cap, when imposed on the tax detectability of executive salaries, saw salaries underneath the limit very quickly move up to the $1 million mark. Companies then rewarded bosses with share options and other forms of reimbursement not covered by the $1 million limit.

Interesting problem

Gates, who stepped back from day-to-day activities at the firm in 2008 to concentrate on philanthropy, warned that the cap marked a "bad milestone" in controlling executive salaries. His outburst came as part of of a discussion on philanthropy at the 92nd Street Y cultural and community centre in New York.

"The compensation problem is a very interesting problem. I do think compensation is often too high, but it's a very tough problem to solve," Gates noted.

"What happened was a surprise to people," he added in reference to the economic crisis. "It comes from everybody being so optimistic and over ebullient and having a view of risk and price appreciation that was completely out of kilter."

Massive pay packages for financial services organizations have caused fury at a time when the US unemployment rate has hit a 26-year high of 10.2 percent. With lucrative stock options sending pay packages to astronomical height, not to mention the ongoing debate on bankers' bonus packages, billionaire Gates' warning is likely to send reverberations across Wall Street.

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