The public outrage over bonuses paid to AIG executives, and resulting government proposals to cap pay at companies receiving federal bailouts, illustrate rising concerns about executive compensation. Indeed, some analysts contend that ineffective compensation structures encouraged Wall Street executives to take on excess risk in the hopes of winning huge payouts, which in turn contributed to the continuing financial crisis and recession. Bonus backlash aside, new Wharton research suggests that a compensation structure based on long-term escrow accounts could be better — at least for a company’s future — than the common practice of rewarding short-term changes in share price. Wharton finance professor Alex Edmans and a group of colleagues propose linking an executive’s compensation to the performance of the firm over a longer horizon. Their method also takes into account changing conditions within the firm.…