As the outline of the $700 billion bailout come to light, we’ll hear more about the impact of limiting CEO pay for those companies that sell their non-performing securities to the American taxpayer. The most frequent argument against any such limitation is that it would discourage some companies from participating in the program.

If I were a director of a public company whose CEO was making decisions solely on the basis of the impact on his or her salary, I’m not sure I’d stand by while the company absorbs the losses or, indeed, folds due to the selfish interests of the top dog. The argument doesn’t make sense. Or if it does, it says something disturbing about our brand of capitalism and public companies. Why is it in the interest of stockholders that their CEO keep his multi-million dollar salary, bonus and parachute if it means the business will suffer?

The imbedding of friends of the CEO on corporate boards is, if not the root of the problem, certainly it is one of the main causes. The argument that boards must offer outlandish pay packages to attract top talent is suspect. My guess is there are many people in the upper and mid echelons of most corporations who can effectively run the company and would be happy to do so for less than $25 million.

Moreover, the method for choosing CEOs defies logic. Consider Bob Nardelli. He was CEO of Home Depot for about six years. During that time, shareholder values was cut at least 25%. When he was fired, he walked away with a $250 million parachute. Then he was hired to run Chrysler. By then Home Depot had lost another eight percent. What exactly qualified a guy who couldn’t run a home improvement concern to be CEO of an American icon? Perhaps it’s hubris. Now he wants a government loan to bail out the struggling automaker.

Maybe the idea that the CEO should be accountable, especially if taxpayer dollars are at stake, is a quaint one. But it’s an idea worth considering before we sign the check.