The federal bailout of big financial institutions has brought unprec¬edented attention to executive pay. AIG and the big banks that got TARP money were demonized for paying bonuses even though they were failing and bringing the international economy down with them. The picture that emerged in the public eye was one of greedy executives and negligent board members who put executives’ interests ahead of those of their organizations, their shareholders, and the taxpayers who were helping them avoid disaster. In response, Congress imposed limits on executive pay at institutions receiving TARP funds.

The current economic and political climate should be cause enough for every healthcare board to reconsider how it pays executives. If the board would be uncomfortable defending its compensation philosophy or executive pay program to the community, it should update the program to reflect current realities.