Despite a 5.5 percent salary increase in October 1979, the adverse effects of limiting or denying these increases to Federal executives have worsened. The Senior Executive Service (SES) was created to provide monetary rewards to many top executives on the basis of performance. Changes in pay-setting for Federal executives are critically needed if: (1) the problem executives face due to diminishing real salaries is to be alleviated; (2) pay distinctions are to accurately reflect differences between levels of responsibility and performance; and (3) agencies are to avoid serious recruitment and retention problems. SES success also depends on the granting of annual adjustments to the Executive Schedule and granting performance awards within already established guidelines. Restricting these essential incentives could exacerbate current problems, foster Government inefficiency, and increase Government expenditures to a level that would far exceed the cost of regular pay raises and performance bonuses. The congressional salaries' link to the Executive Schedule has adversely affected top executives at times when the Congress has, for a variety of reasons, held its own pay down. This has also helped to hold down the Level 5 ceiling on GS pay, compromising legislative mandates for pay comparability and pay distinctions to match work and performance distinctions. The congressional salaries' link to Executive Level 2 salaries has no legal foundation.