The Group of 20 leaders meeting in Pittsburgh tomorrow and Friday have a substantial agenda with several contentious issues on the table, but Bloomberg is reporting that leaders are moving toward some consensus on bonus pay for bankers. French President Nicolas Sarkozy had pushed for pay caps and limiting bonuses. President Obama seems to be endorsing tying bonuses to banks' capital levels. This would appear to be good news to Bob Poze n , lecturer at Harvard Business School. Pozen writes, in a "Conversation Starter" for the Harvard Business Review , that caps on bonuses are unlikely to fix the perceived problem of overpaid bank execs: In my view, fixed limits on bonuses for individual bankers are likely to boomerang by leading to high guaranteed salaries. But limits on overall compensation at unprofitable banks make sense if combined with share awards based on performance. In February of 2009, Congress adopted legislative limits on bonuses of senior executives at financial institutions receiving federal assistance (Assisted Institutions). In specific, Congress limited their annual bonuses, or any other type of incentive awards, to grants of restricted shares of Assisted Institutions not exceeding one third of annual compensation. These legislative limits on individual bonuses have already led to much higher annual salaries at Assisted Institutions. For instance, Wells Fargo raised the base salary of its CEO from $900,000 to $5.6 million. More broadly, Morgan Stanley increased by 250% the base salaries of its four top executives just below its CEO. Thus, despite the best of intentions, these legislative caps have unlinked executive bonuses from executive performance. By raising base salaries, these institutions are effectively guaranteeing some or all of what used to be a variable payment contingent on that executive's performance. This is a perverse result, undermining years of efforts by investors, academics and others to tie executive pay more closely to company performance measured over a reasonable time period. Read Pozen's full piece here .