The level of pay (how much) is what generally draws criticism and anger (caused in some part by jealousy) and is what "gets people in the door". Form of pay (straight salary, options, etc) is what motivates people.
The problem can be that there is interaction between the two. For instance suppose the FORM of pay has magically been corrected to not reward excessive risk taking. That is fewer stock options. This would not be welcomed by managers who would expect (some say demand), a higher LEVEL of compensation (i.e. a high current state, both are controversial and are getting attention.
This is what is playing out at Goldman Sachs right now.
Dealbook Column - Don’t Fail, or Reward Success - NYTimes.com:
The form of pay, especially at firms that accepted taxpayer money, is drawing ire as being too high. Case in point is this from todays NY Times:
Form of pay:
"...it is actually hard to argue with Goldman’s compensation scheme. Goldman’s executives are paid mostly in stock, which vests over three years starting at the end of the next year, so it is more like a four-year period...no Goldman Sachs executive made more than $225,000 in cash last year. Mr. Blankfein and the rest of his management team...waived their compensation completely.
So even though many of Goldman’s executives may make tens of millions of dollars, it is only on paper so far. And Goldman may impose a clawback provision that would require employees to give up some of their compensation if trades go the wrong way....That’s the good news."
Level of Pay
"To put that $23 billion bonus pool number in perspective, it is the most Goldman Sachs has accumulated for bonuses in its history — twice as much as in 2008. And it is doing so while memories are still fresh that just a year ago taxpayers had to step in when Wall Street, and even Goldman, were facing a run on the bank.
So should we be upset about the bonuses? Is this a problem? Viscerally, it can be infuriating to watch Goldman executives gobble up piles of money"
Add to this the fact that the standard defense (we will lose our best people) is not as strong an argument now as in the past and you have the potential for quite a controversy. Stay tuned.