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There's a lot of talk today about capping top executive compensation in some way. The history of similar attempts ought to make us think long, hard and creatively about finding a method that will work.

Changes in the way compensation is computed tend to happen as a response to other changes that didn't quite work out the way we planned. In the late Seventies and early Eighties, that's what gave us "Golden Parachutes." Return with me to those thrilling days of yesteryear.

Merger mania, complete with hostile takeovers, was in full flood. Wise observers noted that CEOs might not have incentive to do what was in the shareholders' best interests in the event of a hostile takeover. After all, if when your company is taken over, you wind up out of a job, your self-interest is on the side of fighting the takeover.

The "solution" was the Golden Parachute. Golden Parachutes gave executives a guaranteed payday if they were forced out in the event of a takeover. The consultants and board members dusted off their hands and went back to work, sure that the compensation issue was solved.

Then, someone noticed that those Golden Parachutes could contain quite a lot of gold indeed, at least by the standards of the time. When GE took over RCA, former RCA CEO Robert Frederick got (gasp!) $2.3 million.

This is about one percent of what Robert Nardelli pocketed when he left Home Depot, but times were different. There were legislative hearings. And in 1984, there was a law to fix things.

Lawmakers changed the IRS code so that any payment of more than 2.99 times an executive's annual salary was subject to a 20 percent excise tax. The lawmakers dusted off their hands and went back to work, sure that the compensation issue was solved.

At the time, severance for a top exec was about one year's pay. Compensation committees looked at the law and decided they could go up to three times without incurring government wrath. And so they did.

When Bill Clinton ran for President he chose high executive salaries as a campaign issue. After he was elected he pushed for a law that limited the salary that a company could deduct on its taxes to $1 million. The law was passed in 1993. The lawmakers dusted off their hands and went back to work, sure that the compensation issue was solved.

Consultants and compensation committees came up with a response quickly. You can only pay a million dollars in salary, they reasoned, but there's no limit on other compensation.

Stock options were supposed to be the magic wand of compensation. Salary would be a small portion of the total package. Stock options would make up the rest, and the consultants swore that would tie executive salaries more closely to company performance. The consultants and board members dusted off their hands and went back to work, sure that the compensation issue was solved.

That scheme seems to have unraveled in three ways. First, "company performance" was defined in terms of stock price. That led to greater importance of quarterly earnings. That led to the concept of "managed earnings." And that increased the pressure to cheat.

The other problem was that executives seemed to get their bonus whether or not the company actually performed well. Some companies even use the oxymoron "guaranteed bonus." What we got at many companies was "pay for non-performance."

Companies and their compensation consultants claimed that a company could only get and keep top CEO talent if they paid more than anyone else. That set off an "arms race" in compensation. The result is that CEO pay, which was 100 times the average worker's salary in 1993, is now north of 300 times at large companies.

So now the politicians are going to have another run at the problem. They'll hold hearings and share sound bites. They'll pass some more laws, after which they will dust off their hands and go back to work after announcing that the compensation issue is solved.

I figure that today's lawmakers aren't any smarter than the ones in 1984 and 1993. More importantly, I don't see any indication that enough of them are willing to subordinate their political interest to the national interest to result in any real problem solving. Which means I think we'll be back here having this discussion again in a decade or so.